Since the holidays come with lots of excitement, many are prone to becoming a little too plentiful when it comes to spending. They want to have fun with family and friends as they unwind, but when the holiday season is over, and things are slowly going back to normal, reality hits.
For this reason, January is known for being the most depressing and longest month because, by this time of the year, most people are holding onto their last franc after spending all they had during the holidays.
But why should this be an annual ritual? How can one overcome the infamous ‘January blues’?
Innocent Ujeneza, an IT specialist, says the month of January always presents double trouble when it comes to finances. This, he says, is as a result of people receiving their monthly salaries very early in December and going on to spend every coin, forgetting that there will still be expenses to cater for even after the holidays.
He attributes this to over-excitement and poor planning.
"We always know that January can be tough if we overspend during Christmas but we do the same thing year in year out. Whereas the Christmas holiday is a great time to enjoy, it is important for us to plan and spend within our means,” he says.
Canisius Muhuma, a mechanic, says most people are always experiencing financial crises when the holidays are over. This, he believes, is as a result of following the band wagon when it comes to celebrating the festivities.
He points out that most people don’t want to feel left out, hence, end up doing what others are doing even when they can’t afford it.
"I think people can always celebrate Christmas within the means they can afford. Don’t go overboard if you aren’t financially solid. Having fun doesn’t mean going to expensive places because a simple get-together with family and friends can be a celebration and still mean a lot,” he says.
Kanizio mentions some who go to the extent of getting short term loans to cater for their lavish spending, something he seriously warns against.
Axelle Mutesi, a television presenter, thinks that the major cause of ‘January blues’ is partly because of poor planning, and thinks it’s unreasonable for one to spend everything because it’s December and go hungry in January.
"I don’t believe in January blues because I don’t believe people really get broke like they say, I think what they mean is that they cannot spend as much as they do in December and it’s normal. Just like they say ‘not every day is a Sunday’, meaning things cannot be the same Monday to Monday, so things can’t be the same from January to January,” she says.
Mutesi says to deal with ‘tough January,’ people should plan ahead and know how much they will be spending during the festive season.
"It is important to plan on how much to spend and then start saving for it months in advance. Because I am a believer in having fun and it’s always good for one to actually reap from their sweat, I will not say people should not spend during the festive season. What it takes is just planning ahead, if you want to go for a holiday, shopping, among others, plan for that, months earlier and save for that. That way, you will manage and you won’t be spending everything,” Mutesi explains.
Sidestepping the financial hangover
Journalist Edward Nimusiima is of the view that people need to understand that after the festivities there are immediate responsibilities that come into play, such as clearing children’s school fees.
"This time of the year is when kids go back to school. But because there is little planning with most people, the festive season ends up emptying people’s pockets like crazy. In this period, there’s little planning. It’s always party after party and the worst bit is getting a loan to afford this,” he says.
Writer Michael Majanga quotes financial literacy Coach Patrick Wameyo in his story ‘Why you’re broke this January, how to be financially stable’ showing that this trend is often an indicator of imprudent financial habits – habits that he says have far-reaching implications.
Wameyo is quoted highlighting the habits below that, he says, often land people in tough financial situations.
He says that spending 100 per cent of one’s income each month is committing a cardinal financial sin and that one is always 30 days away from poverty, noting that this habit affects people of all income brackets.
He also says that living for others is another imprudent financial habit, noting that living to impress others could have one paying hefty amounts to wear trendy clothes, live in posh neighbourhoods, and drive luxury cars — all so that you can fit in.
The coach mentions other poor habits such as not having clear goals, eating into savings, ignoring insurance cover, misuse of credit cards, and, he advises that for one to get off the highway to poverty, they should adopt Harvard bankruptcy expert Elizabeth Warren’s 50/30/20 rule. Limit your needs (food, shelter, basic utilities) to 50% of your post-tax income.
Next, spend a maximum of 30% on your wants. This could be simple niceties like spending extra cash for a nice haircut, to buying 1GB of bundles or even something more significant like a new car, he says.
Finally, a minimum of 20% of your income should go to savings and debt repayment. If you want to get out of debt or stretch your money further, reduce the cap on the other two allocations, he adds.
Wameyo also observes that some people make savings, but before the month is over, they find that they have somehow used some of that money. Essentially, they are just postponing consumption, he explains.
If you find yourself falling into this trap, you should try making your savings inconvenient to access. Disabling mobile banking or setting withdrawal restrictions on your savings account could help you keep your kitty intact, he advises.