Most readers will be receiving their pay cheques early this month – in fact, many of you may have received your salary on the 14th.
While it is a great feeling to see that money hit your account early, especially with the financial demands of the festive season, keep this in mind – that money has to last you until the next payday, which is 40 days away!
You still need to make provision for the bills that come in at the end of December, as well as the usual expenses in January. A lack of planning will give you a serious hangover after New Year.
In fact, January is the time we see a spike in “payday” loans as people have not budgeted correctly and realise they do not have enough money to meet day-to-day spending for the whole of January, let alone those extra payments like school fees and uniforms.
So, to avoid that financial headache, before you spend a cent, pay all your end-of-month bills as soon as your salary hits your bank account. An early payment into your mortgage or vehicle finance has the added benefit of saving on interest.
If you have debit orders that you cannot change, calculate how much you need to keep aside. Make provision for day-to-day expenses in January such as groceries and transport.
To make sure you don’t spend the money you’ll need to pay your bills, it’s a good idea to put it aside in a savings account that is linked to your transactional account. Just make a note to transfer the money back into your transactional account before the debit orders are due.
If you received a 13th cheque or even a tax rebate, there are a few ways to use the extra cash to improve your financial situation:
- Take your smallest debt, pay it off and then close the facility so you are not back in the same situation next year;
- Start/boost your emergency fund; and
- Save tax and boost your retirement provision by investing up to 27.5% of your bonus tax-free into your company retirement fund or personal retirement annuity.
When your bills are paid, some debt is settled and there’s some money in a savings account, you can spend the remainder of your salary on the festive season free of guilt.