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SIMON BROWN: I’m talking with Tshego Bokaba, Consumer Financial Education and CSI [Corporate Social Investment] manager at Momentum Metropolitan. Tshego, I appreciate the time today. By an oddity of the calendar this December has five Fridays, five weekends, each of those with an extra chance for us to blow our budget. It’s going to be a tough month for our wallets and our budgets.
TSHEGO BOKABA: Absolutely. It certainly is going to be a tricky one if we don’t spend carefully, if we don’t budget carefully. I mean, what happens in December is that you find that most people get paid early. We get paid in the middle of December, which means that your December salary is meant to last you for 16 days in December and 25 days in January until you get your next pay check, which essentially means that your December salary should at least last you for 41 days instead of the normal 30 days that we are normally used to. So we really need to be very careful around how we spend our money in December. Otherwise, we will find ourselves going through those Januworry blues.
SIMON BROWN: That Januworry – of course we forget. Particularly if you’ve got children Januworry is all about ‘back to school’. There are a whole lot of expenses around that.
What are some of the common mistakes that people are making with that early payment, so we can try and avoid and take some pressure off the beginning of the new year?
TSHEGO BOKABA: So the first thing is what people tend to do is to forget that there is actually a January that they still need to take care of. There are still debit orders that need to go off. You spoke about children’s school fees and children’s uniforms. Some parents have children going to new schools, which means you need to get new uniforms. We know how quickly kids grow up and outgrow most of their things. So I can bet you that maybe 80% if not 100% of all parents have to buy school uniforms for their children.
So you need to save money with the salary that you get in December. At least put a portion aside for your debit orders and essential things like your bond, your electricity and essential things. I’m not talking about non-essential things like entertainment or gifts or things like that.
Some people are lucky enough to receive a bonus in December. Take a portion of that bonus and pay upfront some of your debt to avoid getting into debt in January or in December, because if you are not careful with how you spend your money, what is going to result is you having to go and borrow some money or use your credit card in a very irresponsible way.
SIMON BROWN: That’s something I never thought of. That money, which arrives early – whether it be your January salary or a bonus – is actually [for you to] go and pay forward some of your bills. You know what your rent or your bond or something’s going to be. If possible, if it’s not a debit order, just pay it early rather than leaving that money in your account and running the risk of it being spent.
TSHEGO BOKABA: Absolutely. And you even have some companies or financial institutions that offer you an option to pay your debit orders earlier. So instead of paying your debit orders on December 25, you can have them debit your account as early as the 20th of December so that at least you know that is out of the way. You only have January that you need to look at from a debit-order perspective.
So just make that arrangement with your financial institution or whatever company debits your account; make an arrangement so that they debit your account earlier as opposed to on your normal debit-order day or later. You will find that most of the debit order days actually fall on a public holiday. It could be the 25th, which is Christmas day, and they will only debit your account later. So if you are wise, if you want to have a stress-free December and January, you need to at least make that arrangement with your financial institution.
SIMON BROWN: A big part of this – and I know people don’t like budgets – but a big part of this is a budget, because that does two things. It can help you manage the January process, those new school uniforms, back-to-school stationery and the like. But what it’s also going to do, it’s going to show you what you actually to spend in December, so that when you’re somewhere swiping the card you’re not stressed, assuming it’s within the budget.
TSHEGO BOKABA: Absolutely. You put it so well. Budgeting might look like a lot of work. at first. But in the long run, it will secure the financial wellness that you need to acquire wealth and give you peace of mind. So it’s very advisable to create an effective budget to manage your finances, track where you overspend money, and stay out of debt.
Budgeting is one thing, but sticking to that budget is very important to make sure that you are very strict; and you need to talk about the budget with your family. Engage your entire family in planning this budget. Let your spouse know. Let your children know. That way you manage expectations because they know this is how much we have as a household for December and January, and this is how it’s been allocated for gifts, for Christmas lunches and for everything else that we need to do as a family.
So even in setting that budget, don’t set it alone. Involve the whole family so that expectations are managed. Even in tracking them, involve them to say this is how we are tracking, which means we have this much money left for this item. So involve them and it’s going to make things very easy for you.
SIMON BROWN: Yes, I like that idea. It’s a community process. Get the whole family involved, everyone on it, on the same page, so that everyone understands why it’s happening. I think often you get left behind and you’re not sure.
We’ll leave it there. Tshego Bokaba, chief of financial education and CSI manager at Momentum Metropolitan, I appreciate the time.
