As December approaches, many South Africans eagerly anticipate their salaries, and for some fortunate individuals, the promise of a Christmas bonus or a coveted 13th cheque. P[
Image: Karen Sandison/ African News Agency
Now that we are in December, many South Africans looking forward to their salaries and for the lucky ones, a Christmas bonus or a 13th check.
According to Ester Ochse, Product Head at FNB Integrated Advice, this is the perfect time for South Africans to put that extra cash to good use and set themselves on a good financial path leading up to January.
"The key question to ask during this time is how does one use that bonus for maximum efficacy," Ochse said.
Here are five smart ways to use your December bonus responsibly to avoid Januworry.
The first thing that you should is to allocate a portion of our money to financial wellness and the other portion towards fun.
You can do this by taking 80% of your December salary and bonus and putting it towards your short or long-term financial goals and financial wellness. The remaining 20% you can use to spoil yourself for the hard work you put in during the year.
It is essential that you consider paying off expensive unsecured debt with your bonus as this is a great way of saving money in the long run.
In order to do this, you will need to make a list of all the money that you owe, the amount outstanding, and the interest accumulated over time to have a clear picture of how much of that debt you can pay off with your bonus.
"The trick here is to free up your monthly cashflow while allocating a certain amount of money to paying off the remaining unsecured debt quicker or putting it towards an emergency fund for unforeseen circumstances for the future," Ochse said.
Now is the ideal time to use a part of your bonus to kick-start or add to your emergency fund through a savings account. This is an interest-bearing type of cash savings product that is easily accessible within seven days once you have given the bank notice.
The idea here is for you to save between one to three months’ worth of income in an emergency savings fund. Having an emergency fund will help in the future should an unexpected expense come up, then you won’t need to go into debt to pay for it.
After you have paid off your unsecured debt and set up an emergency fund, you should think about adding the extra money to your longer-term financial planning goals such as retirement, education, a home or car deposit.
Ochse said: "You can then leverage off the benefits of capital growth and compound interest. For this, you can consider options like a Unit Trust or Exchange-Traded Funds (ETFs) as these are ideal for longer-term investment growth to help you on your wealth creation journey."
Lastly, spoil yourself with a portion of your bonus, the 20% that you have kept aside. You have worked hard all year and gratification can come from looking at things you would not normally purchase or even taking the family away for a holiday.
If you are looking to use your money efficiently then try to spend the reward points you have earned from your loyalty programme partners, as this will help to maximise your money.
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