By TKay Nthebe
The happy season has officially begun – a great opportunity to celebrate what has been a very long and tough year. Some received thirteenth cheques in November, December salaries will be paid earlier, and bonuses will be paid in a few weeks. How can you be savvy and make your money work for you?
- Avoid increasing debt levels
We are currently in an interest rate hike season as central banks continue to fight high inflation. The Central Bank of Lesotho (CBL) announced a 75-basis point interest rate increase, leading to a higher prime lending rate. What does this mean? This increase in interest rates means your loan instalments have become more expensive, and you will be paying more on your home loan, personal loan, and credit cards. It is therefore wise to avoid taking new loans or increasing existing ones during the festive season. If you have a bonus, use part of it to reduce your loans or pay them off.
- Avoid spending mindlessly
The excitement of the festive season can cloud our judgement. I cannot emphasise the importance of having a spending plan enough – what do you want to achieve with your money? Prepare a list of all the expenses you need to take care of during the festive season including school fees, school uniforms, groceries and debit orders. Avoid the ‘I want to need it’ syndrome where you feel like you need to buy everything. Just because you have money in the account does not mean you should spend it recklessly.
I often recommend the 50:30:20 budgeting rule to my clients – where 50% of your budget should go towards your basic needs such as food, rent and transportation, 30% to things you want or enjoy doing and 20% towards your savings and investments.
- Set financial boundaries and say no
Many of us will travel back home in the next few weeks to visit family and friends, especially after a long year. While spending time with loved ones is often special, it can also be financially taxing when family members expect you to give them money or pay for certain things because they believe you have a lot of money. It is important to set financial boundaries and learn to say no, without feeling guilty. How can you do this?
- Determine how much you can realistically afford to spend on family.
- Prioritise expenses that are important and only pay for those.
- Avoid spending money you do not have or taking loans to please your family and friends.
- You do not need to go to every event, party, braai or gathering.
- Enjoy the festive season responsibly
It has been a tough year, allocate some money towards gifting your family, spoiling yourself and having fun – you have earned it! However, while you have fun, avoid breaking any laws and make sure your insurance policies are up to date and your valuables are protected. Do not forget that January 2023 is a few weeks away, remember to plan and prepare for it. Likhomo!
