Before you blow your bonus ...
It’s been a tough year for many South African businesses, and perhaps your employer has decided against giving the staff year-end bonuses, or is paying a reduced bonus. If you are fortunate enough to receive a substantial bonus on top of your regular salary, think about how it could help you and your family financially over the long term before blowing it on expensive gifts, lavish entertaining or a luxury summer holiday.
Economists predict that 2017 will not be much easier than 2016 for consumers and investors; it may even be tougher. In a year’s time, you may regret not having put your bonus to more productive use.
In the latest GrayIssue newsletter to investors, Allan Gray’s business development manager, Bekithemba Mafulela, quotes the philosopher Viktor Frankl: “Between stimulus and response, there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom.”
Mafulela says many of us have a “winning-the-lotto” response when we receive a bonus – in other words, we see it as an unexpected windfall that is not part of our regular income, and so we often spend it “in very poor ways”.
He says that, by creating a space between the (financial) stimulus and your response, “you can stop being a slave to over-spending or accumulating consumptive debt and set yourself on a path of financial security and wealth creation”.
With this in mind, you should carefully plan your holiday-season spending and use what you can of your bonus either to reduce your debt or to boost your savings.
HAVE A SPENDING PLAN
“Expecting things to just work themselves out is not a good strategy for approaching the festive season,” Mafulela says. “Plan how you will allocate the money before the rush of blood to the wallet that happens when the bonus arrives.” And try to resist the wily ways in which retailers persuade you to part with your cash: the flurry of newspaper inserts advertising specials; the festive lights and decorations that signal the start of the spending spree; and stores designed to make you spend by, for example, using “roadblocks and labyrinths”