For many people it is also bonus time and a good plan will go a long way to securing you financially in 2016 and beyond.
\n\u201cWhile it may seem early, South Africans need to spend as much time planning for their end of year bonuses as they do on holidays and travel,\u201d said Eunice Sibiya, head of consumer education at FNB. She added that if you have started looking forward to the end of the year, it is time to consider what you will be doing with your bonus before it is swept away by the holidays.
\nMany people spend their bonus before it even hits their accounts at the end of the year.
\nBelow are six tips to help you structure allocations for the additional money.<\/p>\n
Have a plan<\/b> Pay down short term debt<\/b> Consider putting money into your home loan<\/b> Set aside a portion to short-term savings<\/b> Look after your future self<\/b> Have a bit of fun<\/b>
\n\u201cSit down this month and create a plan for your bonus.
\n\u201cThis means looking practically at what your responsibilities are, what expenses you expect to have in 2016 as well as where this money can work the hardest for you.\u201d
\nOnce you have taken all of this into account, you will proportion your bonus according to debt, savings and spending. The best way to do this is to split your bonus as percentages and not Rand value.
\n\u201cIf you split your bonus by percentages it will firstly, stop you from being reckless. Secondly, regardless of the bonus amount you know that you will be spending, for example, 40 per cent of it towards paying off or reducing debt,\u201d said Sibiya.<\/p>
\n\u201cA sizable portion of your bonus needs to go towards paying down any short term debt that you may have.\u201d
\nThis debt can be in the form of credit cards, store cards or personal loans.
\n\u201cThis type of debt is the most expensive and if you are able to bring this debt down or even succeed in paying off one of the cards or accounts altogether, your 2016 will be much brighter,\u201d said Sibiya.<\/p>\n
\nIf you don\u2019t have high short term debt, another place you can look at putting your bonus is into your home loan account.
\n\u201cReducing the outstanding balance on your home loan will reduce the interest charged. This has two benefits, paying off your loan sooner, or having access to funds in the future if you need them.\u201d<\/p>
\nConsider expenses you will definitely be faced with in 2016 such as school fees, any holidays that you have planned or home maintenance.
\n\u201cPutting away a portion of your salary to costs that you know you will face in 2016 will be a huge relief when payment is suddenly due,\u201d said Sibiya.
\nOn top of expected costs, you will also need to put away an amount towards unexpected costs.
\n\u201cWe are eternally optimistic when it comes to how far our money can stretch, but if you look over the last year, how many times have you been faced with an unexpected cost? A family member who needed medical help, a broken down car or appliance?
\n\u201cIt is important to have a bit of money to help you through those. This will help reduce dependency on loans.\u201d<\/p>\n
\nYou also need to look after your future self, beyond next year. This means putting away some money that you won\u2019t touch until retirement.
\n\u201cHopefully you have a retirement plan of some sort, if you don\u2019t, look at getting on it in 2016,\u201d said Sibiya.
\n\u201cIn the meantime a part of your bonus earned now, will be able to help you in your senior years.\u201d<\/p>\n
\nSet a small portion, around 10 to 20 per cent, of your bonus aside to spend over the holidays.
\n\u201cIt is unreasonable to expect that you won\u2019t spend some of your bonus money on having fun with friends and family.
\n\u201cBut, once you have allocated the additional money towards debt and helping secure your future self, you will see that there is not much to spend frivolously, at the end of the year.\u201d<\/p>\n