People really go unnecessarily broke over the holiday period. So, the year is almost over. Maybe you’ve made progress in some areas but others you haven’t. Certain things have happened that you planned for while others you simply didn’t plan. Some good, some bad. It is, what it is and December is here. Of course December comes with lots of demand for your money. It’s no surprise that people tend to spend more or want to spend more. There are constant invitations to spend money. Sales or at the very least sales signs on shop windows. The Christmas tree with fake gifts in malls reminding us that we should be buying gifts. That in our own houses, people do not expect to unwrap fake gifts, so you had better go and sort out presents. The Father Christmas in some shopping centres giving trinkets to children. The requests for donations, gifts from various people or organisations to enable others to have a better Christmas. Then there’s the actual holiday plan. You may be travelling or having guests over. Even if you are the guest you may not want to walk in empty handed. Then work life tends to slow down. Some offices close down for this period. For others attention at work just halts and everybody accepts that. This of course means more time on our hands. Suddenly free for lunch today, tomorrow and the day after. ‘Meeting after work’ refers to 3 pm and not 6 pm. Then of course there’s the rude shock of January. You see, December sort of cheats us (Click to Tweet this thought) . We are in a holiday; take it easy, laissez faire mode. We tend to behave like January never comes but it does. It shows up with a reminder of your obligations. See, whilst you were enjoying December, life actually does go on. Rent, insurance, school fees falls due. Yes, you are still a human being after December so you need to eat. Loan collections in banks did not cease so your credit card, mortgage, personal loan, car loan will still fall due. We find ourselves in a lot of trouble in January. Something miraculous did not happen to wipe all our problems away. So with two weeks before Christmas, what can you do?
If you have been reading my articles, needs vs. wants is no longer a mystery. But because of what has been described above, you need to list down needs vs. wants particularly for this holiday season (Click to Tweet this thought) . Let’s make sure we are on the same page. Eating is a need. Eating at a restaurant is a want. School fees is a need. A designer school bag to go with the uniform is a want. Rent is a need, a holiday is a want. Now before you get scared I am not telling you not to have any wants this season. Just make the list so you can decide how to allocate this money. The first priority must be given to the needs. No matter what new phone we want to buy, holiday (if not already paid for), how many restaurants we want to go to; we will suffer more if rent, food, school fees is not paid for. So at this part of the plan, it doesn’t matter what you want. Deal with what you need. List it down and calculate the amount of money needed. Do not get tempted with thoughts like negotiating with the school over a payment plan in order to have more spending money. Or lying to the landlord that you got robbed. Or that a meal can be skipped. That money (for your entire needs) has to be put in a separate account. Your instinct over December will be to spend. So don’t lie to yourself by keeping it in your current or everyday transactional account. It should be in a place where you can’t access it easily e.g. via Mpesa, cheque, card. Even better pay for what you can in advance. Pay school fees now rather than waiting for January 3rd to do it. Pay rent for December and January. Let your electricity bill for once be in credit. A lot of people I give this tip to are hesitant because they feel like the landlord or school is sitting with ‘their money’. Yes he/she is but this system is also saving you from the shop or bar that would otherwise eat up your rent. What we are trying to avoid here at any cost is falling behind on payments. If this has happened to you before, you will appreciate that it is possible to spend the rest of the year catching up. And if you happen to borrow to keep up the bills, that becomes a new burden with interest costs etc.
Once you have a good grip on the needs you now have a very realistic picture of what you can afford on the wants. You should have a figure to work with. Chances are it will be nothing close to what you would have wanted it to be. That is OK. Even if you cannot do most or any of the other things you wanted to do. It is not a death sentence to not spend in December. It is OK to find alternative ways of spending time with family, friends that does not involve a lot of money. So back to the figure that you may be looking at. You have to make choices. What is truly important to you? If you bought a new phone but didn’t buy your children gifts, will you be OK with that? Is it being able to travel for a weekend away or going out every night? Is it the furniture that is supposedly on sale or being able to help someone else? These are all individual choices but to answer this, figure out what you will be glad you did in January. What will you remember? What do you value? Time always passes and December too shall pass. The holiday season is not and will never be a surprise (Click to Tweet this thought). Just some festive planning required.
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Waceke Nduati-Omanga runs programs on Personal Finance Management, Entrepreneurship and Career Success.
Find her at waceken@centonomy.com| twitter @CekeNduati| Facebook /CekeNduati