I am not sure if it is only me, but I am certainly finding that lately, there seems to be a whole lot more month left than there is money! Financially everything, across the board, seems to have become a lot tighter.
Inflation is taking a big bite out of our pockets and for me personally, most spending experiences come with a bit of a shock. “Wow! That is a lot more expensive than I remember!” Whether it is fuel prices (I think we are all still trying to digest just how much it costs to fill up a tank compared to a year ago) or exorbitant food prices (a quick nip to the shops for one bag of groceries now equates to the same amount as last year’s weekly shop), it all just feels … expensive! Even my monthly rates bill seems to be more – on closer inspection, water and electricity now have fixed user costs, so even if you control or reduce your usage it does not make much of a difference.
With interest rates up (and probably going to go up further) we are spending more on servicing debt. You may have found too that your bond payments have been increasing. For a lot of people that is a big chunk of their income that was potentially previously disposable. Financially, things are becoming tighter and it will probably get worse, before it gets better.
There is not that much one can do about external factors, like inflation or interest rates. However, there is a saying that you should not worry about the things you have no control over and rather concentrate on those areas where you do have control.
So … where and what can you control?
You may have some management of your earnings, but most salaried individuals do not have much control over increasing what they take home each month. However, we all to a certain extent, have control over what we spend and our debt levels.
Firstly, take a close look at those expenses every month – know what you spend your money on. At first, it may be an alarming exercise but for that very reason, it is well worth it. When the purse strings are tightened, often the first thing that gets cut is putting money away for savings. This is where so many of us make a move in the wrong direction. Where possible, look to cut unnecessary expenses before reducing the amount you put away for your savings. In particular, avoid cutting your retirement savings unless you absolutely have to.
This leads me to Black Friday (and Cyber Monday). For the past month my inbox and social media streams have been abuzz with Black Friday deals that are cited as “the biggest sale of the year!”. One needs to be incredibly discerning of these offers, especially this year. If you have something that you need to purchase then, by all means, use the opportunity (and there can be great deals) for a potentially lower outlay, but make sure you have done the research and your homework before the day beckons (you still have a few hours!).
Here are a few tips to help you navigate the potential Black Friday and Cyber Monday spending maze:
- Make a list of the things you need or want to buy and stick to it. Do not browse until something captures your eye. As Franklin Jones once said, “A bargain is something you can’t use at a price you can’t resist.”
- Establish a budget and stick to it.
- Consider the price of the item and not just the savings. At the end of the day even if you are saving R1 000, you are still spending R10 000 that you previously would not have spent on a flat screen TV.
- When you find something, ask yourself, is it REALLY a good deal or promotion? Often retailers will claim a huge mark down, but check first to see what the product normally sells for before diving in.
- Read product reviews on extremely discounted items. It could be a cheaper model or brand advertised and not what was expected. Apply the thinking, “If it sounds too good, it probably is”.
- Do not go into debt simply to take advantage of a discount. If you cannot afford it with your available funds, do not purchase it. Many shoppers turn to credit, but end up paying much more than the advertised price because of interest and debt service costs.
- Read the fine print on the return policies – especially for any big-ticket items you may buy.
Once you have steered your way through Black Friday and Cyber Monday, the festive season will be truly upon us. Time spent with family and friends, end-of-year (and new year) parties, combined with trips away on holiday, generally also lead to increased spending. None of us want to start the new year carrying unnecessary credit card debt. So where you can, be discerning with where you spend your money this Black Friday (and during the festive break) – it WILL be well worth it.
Very well written Rick. Thanks