Three Months To An Easier Christmas

We have just a few days over three months until the end of the year.  Now let’s not do what we did last year yet again.  You know the financial situation you got yourself into at the end of the year and you promised you would not let it happen again.  Isn’t the definition of madness in fact doing the same thing and expecting a different result?  Well with the last quarter of the year upon us let’s look at a few things that we can do differently so that we don’t leap into the new year with high financial stress levels. The reason I am writing this article this early is that it provides time to put plans in place.

The additional expenses that come around towards the end of the year or the beginning of the New Year are not surprises.  You will spend more money in that period.  In other words Christmas is not a surprise and neither is it an excuse for digging yourself into a financial hole.  There may also be other expenses around that time.  Your car insurance may need to be renewed.   Your children are not a surprise and therefore January school fees should not be a surprise. Overspending on entertainment in December is not a valid excuse to take out a loan to pay your children’s school fees.  You may travel in this period.  If this is something you do every year, then it should also not be a surprise and not be funded by loans.  Take out a sheet of paper.  List down all these expenses that you will occur.  Remember these are expenses that would not usually form part of your monthly budget. – Insurance, entertainment, travel, schoolbooks, uniform, school fees, gifts etc. Get a total.  You have three more income cycles (as there are three more months left). Divide the total amount by three.  That is the money you have to put aside every month until the end of the year to accommodate what you want to do. For example if all the said activities came up to Shs 150, 000.  You would have to put aside Shs 50, 000 per month.  Doing this calculation also acts as a reality check.  Best-case scenario you can easily accommodate it.  Next scenario is you have to cut back on something now in order to afford those expenses.  For example you can cut back on your monthly entertainment expenses now in order to save for the holiday.  Shs 15, 000 saved from this month will result in Shs 60, 000 at the end of the year.  That’s school fees for next term. It’s a holiday.  It’s your car insurance.  Or you can scale back on the end of year activities. Accept what you cannot afford or find different ways of doing things. Travel to a different destination or at a different time. Purpose to spend less on entertainment by making sure you leave less money in your current account and you don’t carry your credit card. You don’t literally have to be at the hotel at the Coast on Christmas day when prices are at their peak.  You can go in November, early December or January to get better rates.  The other thing you can do if you are short of funds is in the next couple of months do something different to generate money.

In line with that, you don’t have to buy things when the stores put up the red sale sign. Many times it is not an actual sale.  Secondly a sale is never really a sale when you did not need the item in the first place. In your list, right down the things you really want or need to buy and start looking for them now.  It is amazing what you can find (and the reasonable costs) when you are not trying to beat a deadline.  When we are all trying to beat the 25^th December or 1^st January deadline, we will buy things at any cost. Of course you are not going to be the one Aunty or Uncle who did not turn up with Christmas gifts for children at the family Christmas lunch. The day before you will be frantically pacing up and down the malls looking for something to buy. Chances are financial logic will be thrown out of the window.  Start the shopping now. Do not also succumb to the false illusion that you have a lot of money. For example in December many people are paid their salaries early.  For most this is one of the few times or only time in the year that two salaries actually meet in the account. This liquidity confuses us sometimes.  Remember these funds are expected to take you up until the end of January. When you get this advance payment, move it into an account that you do not have easy access to. I am giving advice now so that you can set up the necessary systems to make this happen.  If the account is not yet set up by December chances are you will just start using the money.  The second thing you can do is ensure all your essential bills are paid for in advance – before you can even start spending the money.  Go shopping for food for January. Pay your rent, electricity, water, fees etc. for the month of January in December.  That way all your basics have been covered.  This way your holiday activities will not compromise having a roof over your head. Let’s not kid ourselves that things will just magically go right at the end of this year.  Plan ahead. You have three months!