How To Approach Your Finances This Festive Season

In the hive of festive activity, it’s easy to forget your financial goals and spend more than you planned. Next thing you know, it’s the New Year and the long month of January, with its all too familiar financial hangover, is stretched out before you.

When it comes to finances, we know theoretically what the right behaviour is: Invest to create long-term wealth. But knowing isn’t always enough, is it? We all have good intentions to make sound financial decisions, but the temptation to spend makes it difficult to commit – especially during the festive season. If you can exercise some self-control and subdue the impulse to splurge, the financial reward in future could be well worth the sacrifice.

Five suggestions to put you on the right track:

Get balance: When it comes to saving, small rewards can make you feel less resentful about saving and may help you commit to your long-term cause. For example, if you get a bonus, allow yourself a little indulgence and you will feel less like you are punishing yourself by saving the rest.

Save before you spend: Self-control runs low over time. When managing our finances, we tend to begin the month with good intentions but as the weeks go by, we falter. A good way to counter this is to set up a debit order for your savings that comes off at the beginning of the month and then forget about it, rather than telling yourself you will save whatever you have left over at the end of the month.

Avoid stress spending: We are more likely to splurge when we are feeling stressed but, be warned, the high from retail therapy is often followed by the bang of reality. If you are a stress spender, avoid putting yourself in tempting situations.

Rewire your thinking: A cue is something that prompts an action, and we tend to get into the habit of responding to certain cues in the same way but this doesn’t mean it’s the correct impulse. For example, many of us interpret having money in our bank account as a cue to start spending. We should recondition ourselves to interpret having money as a cue to save.

Believe that you can do it: We can be our own worst enemies when self-doubt gets in the way of us achieving our goals. If you don’t really believe you can achieve something, then your internal feedback loop prevents it from happening. If you want your brain to believe you can do it, you need to believe that what you are doing is worthwhile. To help you do that, visualise your long-term goals and the joy you will derive when you accomplish them.

Read the full article: https://www.allangray.co.za/latest-insights/personal-investing/how-to-approach-your-finances-this-festive-season/ 

December 10 2018 By Lettie Mzwinila - Allan Gray Financial Planning