Introduction
By now many businesses are on annual shutdown or have closed for the festive season which includes Christmas and the New Year holidays. After the festive period there is January, a financially painful month for many people, due to back to school and the financial stress loosely referred to as “January disease”. This article is not meant to dampen your celebrations or enjoyment of the festive season but to give some hints so that you are not a financial prisoner in January. Not that you will go to jail but that lack of finances may take away your freedom or dignity.
Festive period
During the festive period people do many different things but generally meant to enjoy the period. Some people travel to their rural homes, some to local or foreign tourist resorts, yet some visit their relatives and friends locally or outside the country. There is absolutely nothing wrong with enjoying the festive period for as long as it make you and your family happy. It is about how you do it and how you manage your finances in December and January. Of course I am not advising people to take a short term view to financial planning by focussing on the two months only. No. I am simply emphasizing those two particular months as they are usually contrasting with December providing joy and January misery.
The festive season, especially Christmas, by its nature attracts or causes a lot of expenditure in a very short space of time. Such expenditure is on things such as new clothes especially for young children, groceries, travel, parties and beers for some.
After Christmas comes the New Year’s holiday. It is common for people to throw parties from the New Year’s eve. Some people still travel if they did not do so during Christmas or in addition to Christmas travel.
Back to school
Soon after the festive period its back to school. Children will be excited to go a level up at school without knowing the state of affairs in their parents’ pockets, pillows or bank accounts. By that time the damage may already have been done especially for those whose parents enjoy parties or drinking the wise waters without respecting their financial limitations. It can be worse for those with children going into ECD, grade one, form one or lower sixth form as new uniforms will be required. It is like as soon as the festive mood goes away back to school comes kicks in to disturb one’s peace of mind.
Managing personal finances during the festive season and January
I this article I wish to give a few hints on how to manage your personal finances during these two contrasting period that require funds for different reasons.
Early salaries
Due to annual shutdowns December salaries are normally received earlier than usually. The period between that salary and the next one in January is usually long and slow moving. That has to be factored in financial plans.
Financial Plan
By the time we get to November or December a family should have a plan including a financial plan to cover the festive period and back to school. As regards the festive season a family should agree on how they are spending Christmas and the New Year’s holiday. There should be a budget and depending with your situation may need to streamline or reduce expenditure. If your finances do not allow you to travel be happy to stay home.
For back to school parents ought to assess their children’s requirements on school fees, uniforms and other related issues early. I know of some people who, for good reasons and prudence, prefer buying school uniforms and even paying school fees before Christmas to avoid impulsive expenditure or straying into reserved funds or the little savings. At times it is necessary to juxtapose the budget for the festive period and that of back to school and make a decision between joy now and misery later. A compromise of some sort may be necessary. By its nature money is never enough. If you are financially privileged as to afford extras or have reserves you should thank God and preserve that privilege. I do not think I will be wrong to say for many people its hand to mouth.
I remember when we were growing up parents would come up with lists of requirements for December and the first two weeks of January. It was painful to be told that some plans had to be altered because money was simply not enough. That’s when I began understanding that the size of a family can have an impact of the standard or quality of living.
We also observed some families that would throw big and loud parties and money would go. Come January things were not as pleasant. They even struggled to meet commitments such as school fees, uniforms, food, rent or utilities. They resorted to seeking soft loans or bridging finances or even selling a few assets or belongings for a song.
What may go wrong in January
The following situations are quite common during early January:
- All of a sudden there is no money as if money has legs or wings.
- Inability to pay school fees or buy uniforms.
- Inability to pay for day to day requirements such as groceries, transport to work, etc.
- Selling assets at give- away prices.
- Borrowings or debt accumulation.
Managing financial emergencies in January
Reality is that in early January financial emergencies may visit or confront you. You will not be the only one but be warned that “problems do not disappear”. In the event of such emergencies one may consider the following:
- Seeking soft loans or bridging finance from relatives, friends or even financial institutions. Please avoid loan sharks.
- Negotiating payment plans.
- Do not sell assets unless its unavoidable and you can get a good price.
Conclusion
There is need for prudence financial management during the festive season to avoid misery in January. Merry Christmas.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is a practising commercial lawyer and conveyancer, chartered accountant, insolvency practitioner, registered tax accountant, consultant in deal structuring and business valuer. He is also a director with Investacare International (Private) Limited. He writes in his personal capacity. He can be contacted on +263 772 246 900 or gohofisi@gmail.com
