The holidays are here, and that means we are entering a wonderful season of celebration, time spent with family, and gift-giving.
However, we are also entering a consumption season that places your financial situation at the centre stage.
It is going to take careful planning and a lot of effort to keep your finances on track this holiday season.
Joshua Muthama, Family Bank Nairobi North Area Manager, shares tips on how to effectively manage your finances this holiday season:
1. Set a budget for holiday spending
Setting a budget and sticking to it is one of the best things you can do for your financial situation at any time of the year. However, it is particularly important during the holidays, when we have a lot of extra expenses.
Take some time with your holiday budget, look at how much money you have in the bank and left over after all your expenses each month, and decide what you can afford to put aside for holiday spending. When you arrive at the number, you have to stick to it.
That way, you can spend every last cent of your holiday budget but still have the rest for your other monthly obligations.
2. Track your spending
After making a well-planned budget it is time to spend and buy gifts for relatives and friends. As you do so you should not forget to note down each expense which will help you adhere to the threshold that you had set while making the budget.
Tracking down the expenses helps you better manage your finances and also helps estimate your remaining spending capacity, so you can use the remaining money for other high-priority things.
3. Change your mental perspective
Most of the pressure felt around the holidays is the result of the societal expectation to give gifts. This creates a sense of obligation since someone gave you a gift, you now might feel pressured to give one in return.
Instead focus on the most thoughtful, meaningful gifts possible that can be budget-friendly and free away from mindless buying and giving.
4. Try to maintain your cash at hand
Having done the budget for the holiday expenses, you must not spend the money you set aside for daily needs to pay for your holiday shopping.
If you spend that money, it could be tough for you to cover your day-to-day expenses. Additionally, you must avoid using your emergency funds to cover immediate expenses.
By adopting these strategies, you can be sure that you will not end up going broke or falling into debt after the festive season ends.