Most companies pay December salaries early, so there is a good chance many of you have already been paid by December 15
While it is a great feeling to receive money early, especially with the financial demands of the festive season, keep in mind that this money has to last you until the next payday which is 40 days away at the end of January!
You still must make provision for end-of-December bills and January expenses. A lack of planning will give you a serious New Year hangover.
January is the time we see a spike in ‘payday’ loans as people have not budgeted correctly and realise they do not have the money to meet day-to-day spending for the whole of January, let alone those extra bills like school fees and uniforms.
So, to avoid that financial headache, before you spend, pay all the end-of-month bills as soon as you are paid. An early payment into your mortgage or vehicle finance has the added benefit of saving on interest.
If you have debit orders that you cannot change, calculate how much you need to keep aside. Make provision for January day-to-day expenses like groceries and transport and those extra costs such as school fees, uniforms and books.
Go as far as putting that money into a savings account linked to your bank account to keep from spending it. Just make a note to transfer the money back into your transactional account before the debit orders are due.
While many companies will not be paying bonuses, if you did receive a 13th cheque or even a tax rebate, there are a couple of ways to use the extra cash to improve your finances:
- Take your smallest debt, pay it off and then close the credit facility so you are not back in the same situation next year.
- Start/boost your emergency fund.
- Save tax and boost your retirement provision by investing up to 27.5% of your bonus tax-free into your company retirement fund or personal retirement annuity.
When your bills are paid, some debt is settled and savings have been put aside, you can spend the remainder of your paycheque on celebrating the festive season, guilt free.