If you’re one of the lucky few to land an end-of-year bonus, use our guide to grow it and get your through an often lean January.
It’s tempting to splurge your 13th cheque on Christmas holiday fun. But who wants to start the New Year already battling to buy basic foods or kids’ school books? Here’s how to use a bonus in ways you won’t regret.
PAY SCHOOL FEES
Get your child’s education done and dusted before the year starts so you can be at peace. If your bonus is enough, pay the school fees for the whole year and buy uniforms and stationery. ‘Remember, many schools will give a sizeable discount on fees if you pay upfront,’ says Joburg financial coach Winnie Kunene.
PUT AWAY MONEY FOR JANUARY
Put away part of your bonus for transport and food in January. ‘There’s nothing worse than starting a year having to borrow money for basics when you had plenty of cash in December,’ Kunene says.
PAY OFF DEBT
The best gift you can give yourself is to lighten your debt load. Paying a portion of your bonus into your home loan or vehicle payments can reduce the interest and the term of the loan significantly, says Mlamuli Mbambo, MD of Ibutho Group and co-founder of MoneyFundi (www.facebook.com/MoneyFundi), an award-winning personal finance training company that teaches people how to manage and grow their money. Kunene also advises doing your best to pay a little more than the minimum monthly amounts on your larger debts, like student loans, where interest on unpaid balances is high.
SAVE
Rather than splurging your bonus, you can open a fixed or term deposit with as little as R1 000 for 32 days up to five years, and constantly earn interest – a smart way to save for studies, a stove or a set of wheels. If you’re able to leave your bonus money for five years (and preferably longer), unit trusts are a good form of investment, says Mlambo.
PLAN FOR A HOLIDAY
By booking in advance, you can take advantage of special offers, especially on flights, says Mbambo. Google your destination, find out what’s available, then draw up a realistic plan of what you can afford. ‘Keep 20% of your holiday budget for emergency expenditure,’ advises Kunene.
‘It’s easy to impulse buy at Christmas or in the January sales – and regret it later.’
SHOP SMARTLY
It’s easy to impulse buy at Christmas or on the January sales – and regret it later. Shop with a list, buy only what’s on it and leave your credit cards at home. ‘Paying with cash makes you fully aware of what you’re spending,’ Kunene says. For bigger purchases, give yourself a 24-hour cooling-off period – many shops allow you to set aside items for a day. Visit store websites to compare prices and find good deals or special offers.
Consider giving your kids an ‘experiential gift’ this year. ‘How about taking them to places they love? Tell them this is their gift,’ says Kunene. ‘Kids need their parents to do stuff with them more than giving them stuff to play with.’ You can do the same for your parents. ‘My daughter took me shopping for a new jacket at Jet last Christmas,’ says Durban-based Miriam Ntuli, 52. ‘The jacket is lovely, I’ll wear it for years, but the best part was spending time with her.’
GIVE SENSIBLY
It’s the season of giving, but prune your gift list, prioritise and be creative. Agree with family and friends that you’ll all buy gifts only for children, in a reasonable price range. If you give vouchers, make sure the expiry date is clearly indicated – a survey by GoCompare showed one in six people has lost money due to vouchers left to expire in wallets and/or drawers. Wherever possible, make gifts and involve the kids – it will not only keep them busy, but help you save and generate great Christmas spirit.
Get your child’s education done and dusted before the year starts so you can be at peace. If your bonus is enough, pay the school fees for the whole year and buy uniforms and stationery. ‘Remember, many schools will give a sizeable discount on fees if you pay upfront,’ says Joburg financial coach Winnie Kunene.
PUT AWAY MONEY FOR JANUARY
Put away part of your bonus for transport and food in January. ‘There’s nothing worse than starting a year having to borrow money for basics when you had plenty of cash in December,’ Kunene says.
PAY OFF DEBT
The best gift you can give yourself is to lighten your debt load. Paying a portion of your bonus into your home loan or vehicle payments can reduce the interest and the term of the loan significantly, says Mlamuli Mbambo, MD of Ibutho Group and co-founder of MoneyFundi (www.facebook.com/MoneyFundi), an award-winning personal finance training company that teaches people how to manage and grow their money. Kunene also advises doing your best to pay a little more than the minimum monthly amounts on your larger debts, like student loans, where interest on unpaid balances is high.
SAVE
Rather than splurging your bonus, you can open a fixed or term deposit with as little as R1 000 for 32 days up to five years, and constantly earn interest – a smart way to save for studies, a stove or a set of wheels. If you’re able to leave your bonus money for five years (and preferably longer), unit trusts are a good form of investment, says Mlambo.
PLAN FOR A HOLIDAY
By booking in advance, you can take advantage of special offers, especially on flights, says Mbambo. Google your destination, find out what’s available, then draw up a realistic plan of what you can afford. ‘Keep 20% of your holiday budget for emergency expenditure,’ advises Kunene.
‘It’s easy to impulse buy at Christmas or in the January sales – and regret it later.’
SHOP SMARTLY
It’s easy to impulse buy at Christmas or on the January sales – and regret it later. Shop with a list, buy only what’s on it and leave your credit cards at home. ‘Paying with cash makes you fully aware of what you’re spending,’ Kunene says. For bigger purchases, give yourself a 24-hour cooling-off period – many shops allow you to set aside items for a day. Visit store websites to compare prices and find good deals or special offers.
Consider giving your kids an ‘experiential gift’ this year. ‘How about taking them to places they love? Tell them this is their gift,’ says Kunene. ‘Kids need their parents to do stuff with them more than giving them stuff to play with.’ You can do the same for your parents. ‘My daughter took me shopping for a new jacket at Jet last Christmas,’ says Durban-based Miriam Ntuli, 52. ‘The jacket is lovely, I’ll wear it for years, but the best part was spending time with her.’
GIVE SENSIBLY
It’s the season of giving, but prune your gift list, prioritise and be creative. Agree with family and friends that you’ll all buy gifts only for children, in a reasonable price range. If you give vouchers, make sure the expiry date is clearly indicated – a survey by GoCompare showed one in six people has lost money due to vouchers left to expire in wallets and/or drawers. Wherever possible, make gifts and involve the kids – it will not only keep them busy, but help you save and generate great Christmas spirit.
ADDED BONUS
Reviewed by Zandile Xabendlini
on
November 02, 2017
Rating:
Reviewed by Zandile Xabendlini
on
November 02, 2017
Rating:
