By African Unity Life
2017 has come to an end and many people will be going home with a bonus or even a 13th cheque. If you’re one of those lucky people, you should consider using that money to start 2018 off the right way.
Sonja Visser, CEO of African Unity Life, suggests you start planning how to spend your extra money by creating a budget. Take a look at your end-of-year expenses, what you realistically expect to be spending over the holiday season and what your financial priorities are.
Visser advises that this time of year is when you should be considering the financial goals you aim to achieve in the upcoming year. She says often people go into denial during the festive season and end up having to deal with debt in the new year.
Instead, you should be wise with how you spend your bonus and focus on your financial situation.
She goes on to say that you should put aside some of your bonus or 13th cheque to cover the following expenses:
Holiday spending. You can’t expect not to spend any money during the festive season. So, you should be sure to factor in any travelling you plan to do, the accommodation you’ll need, as well as food for holiday meals and presents for family and friends.
Any and all debt. The longer you take to pay off any debt, the more you end up paying in interest. So, use this extra cash to pay off your credit card, personal loans or retail accounts. It will cost you now, but, in the long run, it will save you money.
Your bond. Yes, your bond is also considered to be a debt, but it’s an ongoing debt you’re not likely to be able to pay off at once. However, making an extra once-off payment now could shorten the term of your bond. And, don’t forget, it will also reduce the total interest you’ll repay.
Once-off costs. You may find that this time of year comes with a few once-off payments. These include, but are not limited to, school fees, school supplies or bonuses for your own staff. Don’t leave these until the last minute, as you’ll likely have to pay these once-off costs before you get your next pay cheque.
Savings. Your future self will thank you for adding money to your savings. According to financial experts, you should have at least three to six months’ worth of your salary put away for emergencies. So, using this additional money to add to your savings is a very good idea.
Plan ahead. You should always be thinking about your and your family’s financial needs. Do you have enough financial cover and support for the upcoming year? Consider whether you have the appropriate investments and insurance policies – savings for education, life insurance, medical aid, gap cover and funeral cover, for example. Set aside a portion of your bonus for these important financial needs. According to Visser, there are life insurance companies out there which are willing to let you pay ahead for six months or a year. Ask your insurance provider if this is possible, as it will allow you to rest easy in the new year. So, even though it may seem difficult to save money at this time of year, think of the future and start the new year off financially strong.