For those of us in Lagos, Nigeria, harmattan – and Christmas – is very much in the air :-). The retailers have put on the show to draw people in and dispense the contents of their wallets, with the “mind-blowing offers,” the “you must haves,” the “must-visit places,” and the “must-do things.” It is very easy to get caught in the commercial excitement of the moment, especially because the capacity to indulge for most is also increased during this period: bonuses, gifts, and most salaries get paid earlier this month. For those who think the Joneses are the gold standard, it is an even more financially hectic period.
Here is a reality check for us all though: after December comes January, and 10 other months before the next December. January is considered by many to be a long and gruelling month, primarily because the duration between the paydays in December and January is the longest in the entire year for most – an average of 37 days according to my guesstimate. It is also because December is filled with so many activities and holidays from school and work, while January is “empty” after the 1st day of the month / year.
Here is another major reason why January is so long: school fees are due at the beginning of that month! For some, rent is due as well; these two items are the largest monetary expenses for a lot of people. In fact, for some, the financial behavior in December ruins the whole year ahead.
So, now that we have identified some of the ways financial problems are created, here are some of my proposed solutions:
- Forget about keeping up with the Joneses! This will always be my number one advice because keeping up with the Joneses is not a sustainable basis for getting anything done in life because the truth is the Joneses are clueless and broke!
- Create an income-expense plan (some people call this a budget :-)). It would interest you to know that income-expense plans have been saving lives and fortunes since the beginning of time! No entity – individual or organisation – can have the kind of lasting progress a lot of us desire without one of these.
- View your finances through an annual lens. It is rather easy to focus on the cash inflows and outflows of each month on a per month basis. The reality for most of us however is that both our cash inflows and outflows vary by the month, and this is the case regardless of whether we work for an employer (private or public) or we employ ourselves. An annual view will help acknowledge this reality and make your income-expense plan more representative of your situation. It will also make it a lot easier to appreciate why you cannot afford to spend it all in December.
- Save and invest. One of the outcomes of your annual income-expense plan would be the need to save and invest, as some of the current income will need to be put aside to offset an expense later next year.
- Remember the reason for the season: giving and sharing our fortunes with those less fortunate than ourselves, i.e. philanthropy. He who gives shall receive even more. Let us not forget those around us who could really do with a little bit of what we take for granted. Instead of buying your child that latest electronic gadget that she does not need, you could buy the monetary equivalent in rice and give to your domestic employees, or even school bags for their kids.
- And lastly, self-discipline. None of the above can be achieved without a healthy dose of self-discipline. We each need to love ourselves enough to be willing to forfeit instant gratification for a greater longer-term purpose. Just as we need to apply this to weight loss and keeping our bodies healthy, so we also need to apply this to keeping our finances healthy.
Do you need the assistance of a professional with (i) creating an income-expense plan (ii) creating a savings & investment plan? Feel free to drop me a line at email@example.com.
It truly is the season to be merry; my family and I wish you and yours the best of the season. Wouldn’t it be better if the merriment lasted all-year-long though? 🙂