Kenyans are known spendthrifts, especially during the festive period. Kenyans use this period to celebrate as they reminisce the positives and negatives of the year. This year has evidently been one of the worst years and people will be wanting to celebrate the fact that it is finally coming to an end.
As it happens every year, Kenyans will be looking to close the year in big celebrations. However, as it happens every year, many Kenyans will be in debt come January. January is known as a difficult financial month because people spend all their fortunes celebrating festivities in December.
When the calendar turns to January, the negative effects of this spending begins to kick in; higher than expected credit card statements, tighter finances than imagined, increased stress, and regret over the amount of money sent.
How can we avoid this? How can we celebrate the festive season and still have a financially healthy January?
Kevin Namunwa of Cytonn Investments shares several ideas you can employ to ensure you enjoy your December and January.
1. Set a budget
Not having a budget is probably the worst mistake Kenyans make during the holiday season. Kenyans just spend money without knowing how much they are spending on what.
Before you even start holiday shopping, decide how much you are comfortable spending. Think through all the different aspects of holiday shopping: gifts, travel, food, decorations. You need to look at these different aspects and establish what needs to be prioritized and what doesn’t.
After establishing the priorities, you then look at how much you can comfortably spend on each item. If the numbers aren’t lining up, what changes and/or sacrifices need to be made. You need to establish a budget around what you can spend on December and still have money to run you through the first month of the following year.
2. Beware of Retail tricks
If you are disciplined enough to follow your budget, then creating a budget is all that we need to do then you are all set and will be able to save during the festive period. If you are not, then perhaps you need to apply other tricks to make sure you spend as less as you can.
Being aware of retail tricks is important to make sure you only spend what you had planned to spend. In most cases, it is difficult to stick to our budgets because retail stores are very good at getting us to part with our money.
Loyalty cards, retail credit, decoy pricing, incentives to return to the store, constant sales are all tricks that retail outlets employ to get us to part with our money. Be on the look-out for them, especially during the holiday season.
3. Organize Group Volunteering
You are probably not the only one struggling with overspending as much as you do over the holidays. Get your friends, who are also struggling with spending, to do a group volunteer day instead of buying gifts for one another. Make it a day where you give back to the community through a Corporate Social Responsibility (CSR).
This won’t take much of your money and come out of the day feeling proud of your efforts rather than suffering from buyer's remorse, and anyone can benefit from volunteering.
4. Limit Self-Gifting
It is almost a tradition in Kenya to gift yourself after you have achieved a difficult milestone. 2020 has clearly been a difficult year and many Kenyans will be looking to gift themselves for making it through the year and withstanding its knocks.
However, we ought to keep in mind that turning on a new year is not a guarantee that things will be better. In your budget, you should limit the amount of money to spend on yourself during the festivity period. You have the rest of your life to gift yourself, it does not have to be this December.
5. Use cash
In the world we live in today, there are a lot of payment methods and more people are preferring not to use cash. As reliable as the world’s financial technology, sometimes you need to use cash to save money.
Using cash will help you stay within the budget and also when you run out of money, you will not buy any more items. The ability to access your money online has seen many people over spend without actually knowing that they are.
Sometimes you will pay using M-Pesa until you run out of money and you will not be able to account for how you spent the money.
The only time we should not use cash for Christmas shopping is when you are buying online. However, even then you have to track your expenditure diligently. Always make sure you stick to your budgeted amount and keep a list of what you’ve spent on so you don’t go over your budget. It takes just a few minutes to track and it makes a big difference.
Saving money is important during any period and Kenyans have a very poor saving culture. Take initiative to save during the festive period and maybe you will pick up the habit and save for an even greater course.
Dr Pesa is Kevin Namunwa of Cytonn Investments.