Broke after splashing out over the festive season? Get back on track and improve your financial health with these tips.
Somewhere deep inside you a little voice warns you: don’t do it! But you studiously ignore it. You.Must. Spend. Money. Now. A flat-screen TV for the bedroom, iPads for the kids, a holiday to beat the post-holiday blues. You don’t need any of these things but you’ve got your credit card in your wallet and you’re itching to use it.
But beware, experts warn, this is precisely the time of year when you should be extra cautious about wasting money.It’s human nature to want to reward yourself, says Peter Dempsey of the Association of Savings and Investment South Africa (Asisa). Yet people often take it too far.
They blow all the extra cash they have – their annual bonus or savings fund pretty much disappears by the time 1 January rolls around – or even worse, they get into debt.
Wouldn’t it make a nice change to get into the habit of creating a healthy bank balance instead of spending the first few months of the year scrimping and saving after spending a small fortune on impulse purchases that now lie forgotten, cluttering up some corner of your home?
Often the urge to spend can be curbed simply by taking stock of what you already have, Zen Habits blogger Leo Babauta says. He suggests you remind your-self every day of the things for which you should be grateful.
Sooner or later you’ll learn you don’t necessarily have to buy more things to experience a sense of joy or well being. You may already have blown your annual bonus by now – but it’s never too late to start making small changes even with a little extra cash.
Use any extra money to pay off your most expensive debts, credit cards, overdrafts and personal loans so your bank balance looks more positive going forward into the new year.
This is also a time to take stock – what changes can you make now that will payoff by the time of your next holiday? If you really put your mind to it, this should cost little to nothing. Here are some practical tips to help you curb your spending urges and be financially savvy.
Before you go shopping
Draw up a budget to suit your pocket,says Gerald Mwandiambira of the South African Savings Institute.
For instance,decide beforehand what you want to spend on food and drinks when you go out. Don’t go shopping without a list and your budget.
If you struggle to draft a budget, look for advice online, especially on banks’websites.
If you don’t feel like struggling with budgets and shopping lists, set a limit on certain items and how much you can spend on them a year, month or week,Babauta suggests. For instance, decide you’ll buy a pair of pants every second month or only three pairs of shoes a year.
Set a limit on how many things you want to own, Babauta says. “I’m experimenting with a limit of having only the clothes that fit in one bag.”
Leave the kids at home when you go shopping.
It’s hard to say no to a whining child and you may end up spending money on unnecessary things just to get some peace and quiet.
Draw money and leave your cards at home, Mwandiambira says. When your cash is spent you can buy no more.
Once you’re in the store
Remind yourself the buying impulse is not an order you must obey. “It’s only a feeling, like any other, which is temporary and will blow over,” Babauta says.
Buy for the long term. Instead of buying a cheap toothbrush that will last a month opt for a more durable one even if it costs a little more.
Prepare yourself mentally for what may happen when you get to the checkout. Stores are smart: they put all kinds of treats out to tempt you as you wait to pay.
Check your breathing – you can even meditate while in the queue, Cape Town psychologist Linda Kantor advises. Keep reminding yourself you don’t need any-thing on display at the checkout area.
Break the vicious cycle
Learn to distinguish between what you need and what you want. First buy things you need, Babauta says. Once you’ve learnt to say no, you can spoil yourself with the occasional treat.
When you see something you like don’t buy it immediately. Wait a day or two and if you still think you need it, buy it. When shopping online put something you have your eye on in your “wish list” or “basket”and think about it for a day or two.
Go on a shopping fast for a while. Decide for instance not to buy anything for five days. Or buy only food and essentials such as toilet paper for three months and see what you learn from this exercise.
January may be a good time for families to discuss their finances. Start planning and saving now for Easter and your next family get-away, Mwandiambira says.