How to avoid the dreaded ‘Januworry’

The last few weeks before the start of the festive season may find you fatigued and ready to switch off for the festive season. But before checking out of 2022, our advice is to take some intentional steps to ensure that you have a firm hold on what January has in store for you financially so that you can step confidently into 2023.

Finish the race well

You’re almost at the finish line, so commit to finishing the 2022 race well. Many South Africans are still recovering from the economic effects of Covid, with this year being the first full year without lockdowns, so don’t be too hard on yourself. If you’ve made financial mistakes during the course of the year, acknowledge them, bank the lesson, and then move forward. Commit to not incurring any more bad debt and put a debt reduction plan in place that is realistic and achievable. Going into January having attacked even a small portion of your debt can provide you with a massive psychological win that can keep you buoyed for further success at the start of the new year.

Take stock of what January will demand from you financially

Hiding your head in the sand and hoping for the best is not a financial strategy, so set time aside to take stock of what January has in store for you. Having a clear vision of what January looks like financially will alleviate the stress that comes with not knowing and allow you to rest easier over the festive season. Making a list of January’s expenses will allow you to confidently draft your festive season budget knowing that you won’t be robbing your future self. Specifically, be on the lookout for upfront annual discounts such as those offered by schools, tertiary institutions, and clubs, many of which are payable at the start of the new year.

Develop a festive season budget

Once you are confident of your plans for January, you can work backwards to develop a realistic budget for the festive season. At the outset, be realistic about what you can afford in terms of vacation costs, gifts and entertainment. To avoid disappointment, proactively manage the expectations of your loved ones in terms of what is affordable and what is not. Use the opportunity to connect with family, brainstorm ideas, come up with creative gifting ideas, and support local industry. Be strategic about your Christmas shopping and stick to your budget. In the build-up to Christmas, it’s easy to cast your budget aside and make impulsive purchases which will only serve to trip you in January, so be intentional and stick to the plan.

Co-ordinate your banking

Many of us tend to lose track of time over the festive season, which can result in us losing track of our banking – so put plans in place to keep a handle on your bank accounts during this period. Before going on leave, check the interest-free period on your credit cards to ensure that your repayments are made timeously to avoid unnecessary interest being charged. If you’re paid earlier than usual in December, you will need to make your money last until the end of January – so be proactive about ensuring that your debit orders can run and that you avoid running into arrears.

Use your bonus wisely

If you’re fortunate enough to be receiving a bonus or 13th cheque, start thinking about how best you can employ these funds – and avoid falling into the trap of double-accounting. Remember also that any bonus will be taxed at your personal tax rate so be sure to calculate the net amount due to you. You may want to consider allocating a portion of your bonus towards your festive season budget, knocking over some high-interest debt, and setting aside some money to top up your retirement annuity. Importantly, take a look at January’s financial commitments before apportioning your bonus money.

Plan for tax year-end

Keep in mind that February marks the end of the 2022/2023 tax year and if you plan to make an ad hoc contribution towards your retirement annuity, it’s best to start planning now. Contributing towards a retirement annuity is a highly tax-efficient way of investing so it makes sense to maximise the allowable tax-deductible amount if possible. To avoid scrambling around in February, ask your financial planner to calculate how much you would have contributed towards your retirement annuity by tax year-end, as well as your taxable earnings and total allowable deduction, so that you can start structuring your ad hoc contribution.

Get straight out of the starting blocks

Proactive planning before the end of the year will allow you to get straight out of the starting blocks when January arrives rather than having to deal with the financial holiday hangover.

Other tips for a financially sound January include:

• Have a financial plan that starts on 1 January. If you spend the whole of January digging yourself out of a financial mess, you’ll likely spend the rest of the year trying to play catch-up – and so the cycle will continue until broken.
• Create a financial calendar for 2023 so that you can budget accordingly and avoid unpleasant surprises that could have been proactively planned for with a bit of thought. Potential costs such as school sports tours, car licence renewals, tyre replacements, and vacations can be budgeted for well in advance.
• Don’t take bad habits into 2023. Take a critical look at your financial behaviour during the year and pinpoint where you fell short. Did you make some expensive, impulsive purchases that you now regret? Did you incur more credit card debt than you’re comfortable with? Did you overspend on your entertainment budget? Did you lend someone money and are now struggling to get the loan repaid? Identify the mistakes, commit to avoiding them in future, and then move on.
• Hold yourself accountable: You can’t manage what you can’t measure, so commit to tracking your progress on a regular basis and taking responsibility for your money management.
• Have your banking and budgeting apps installed and ready to use from the get-go so that you don’t miss out on important financial data.

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