Many consumers wake up on 2 Januworry every year and wonder how they could have spent all their money so quickly.
With Black Friday behind us and our empty wallets waiting to be filled by our bonuses this coming week and Christmas behind the corner, it is hard to think of what lies behind that and even harder to consider how it feels to have an empty wallet at the beginning of Januworry with its eight weeks.
However, Salem Nyati, consumer financial education specialist at Momentum Group, says the beginning of 2025 will not be defined by ‘worry’ for your household if you put your best financial foot forward and prioritise what is important and avoid splurging this festive season.
The number of financially distressed households has more than doubled between 2021 and 2022, but financial literacy is a skill that can help to improve your financial outcomes and relieve your financial stress, she says.
“For many South Africans, this should be seen as an opportunity to get serious about building a foundation for your financial future and not waste money on unnecessary expenditure during the holidays.
“Financial discipline is important, especially during the last few weeks of the year as It is the basis for a healthy and stable financial life.
“Remember there are plenty of temptations and family pressures to deal with and you must focus to stick to the plan. Do not be swayed into a miserable January.”
Nyati says managing personal finances can be a daunting experience and even more so when you are responsible for other people with individual needs and wants.
She believes a life without financial stress is possible and recommends these practical tips to cultivate financial discipline and pave your way to a flourishing and stress-free 2025:
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Cultivate a frugal mentality to ensure Januworry does not come
Stereotypes aside, Nyati says the idea of frugality encourages people to only spend money in a restrained manner to achieve a longer-term goal.
“Do not think of yourself as stingy or strapped, but rather as money savvy or savings smart.
“Essentially, having a frugal mentality is having a value-first mindset and it can help you discover what you can and cannot live without, as well as what should never matter, to begin with. However, frugal does not have to mean inexpensive.
“For instance, buying an expensive and quality item that will last for years to come rather than getting the most affordable item that may potentially not last as long, can be considered a frugal expense.”
Being this strict about your finances can inspire you to take precautions about your financial situation, such as keeping a close eye on your credit record, maintaining accurate personal financial records, ensuring you have the right insurance in place, as well as staying vigilant for fraud and scams and keeping an eye on every cent as spending adds up, she says.
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Set up an emergency fund
South Africa’s economic future may be looking slightly brighter, but your personal fate has its own life, Nyati warns.
“Therefore, it remains important to always prepare by having an emergency fund for financial shocks, such as medical or other emergencies or an unexpected income loss.:
This way, she says, you can keep up with your regular expenses without getting into more debt. Your emergency fund must always be accompanied by necessary insurance coverage for your important possessions such as cars, income protection and your house.
“Otherwise, you will need to work towards having a fully funded emergency savings account with three to six months of your expenses in available cash.”
Nyati says once you have the safety net in place, you must consider having multiple accounts to keep yourself on task with the specific goals you are saving for, without the risk of funds getting mixed and confusing you.
“Also, for safety purposes, do not keep large sums of money live in transactional accounts. Set your savings in such a way that suspicious activities trigger warnings across multiple channels. Use different bank accounts for different security measures.”
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Regularly review your short and long-term financial goals
Always check in with yourself to see if any of your goals have changed and couple that with understanding if you are overspending or underspending, Nyati says.
“This will give you a sense of where you have some extra cash to spend or save and help you with cash and savings management for the upcoming year.
“This review must include monitoring your debts and savings levels to see if things are manageable and within reason. For expert advice, consider getting a financial adviser to guide you.”
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Make the most of your money with a strict budget to avoid Januworry
Nyati says budgeting helps you to better plan and control your spending while enabling you to extend your buying power.
“It does not have to be complicated. A budget is a plan that helps you to prioritise what is important to you, find ways to achieve your goals and clarify your most important priorities.
“Most importantly, it enables you to maintain balance by helping you to manage your expenses with your income, paving the way for you to live within your limits in the year ahead.
“With a strict budget, you know what it costs to fund your lifestyle and you are able to get a sense of how much you can save or invest.”
She says when you stick to your financial plan, seek reliable financial advice and maintain disciplined spending habits by living within your means, you can improve your financial situation.
“You will also find that constraints allow you to develop a lifestyle that benefits your financial goals and vision for success. This comes with saying no to some things, but also to say yes to others.”
