No year-end bonus? Here's how to cope

For many, a year-end bonus is a much-needed means to reduce debt, allocate lump sums to expenses, or enjoy a holiday after a stressful year.

However, with salaries barely keeping up with inflation, you may well find that a bonus is not forthcoming. We spoke to Nokwanda Msimang, assistant financial planner at BDO Wealth Advisers, who gave us some tips for managing without a year-end incentive.

Tip: Did you know that unit trusts can help you earn investment income in the long term? Find out more here.

Plan ahead

Msimang’s first tip is to plan ahead – something that has served her well personally.

“Just a few weeks ago, my friends and I were planning a big trip back to KZN for the holidays, to see our families. Understandably, the issue of money came into question. ‘How do we use the money we have, and still come back to soldier on in January?’

“We discovered that at the beginning of the year, we were committed to maintaining our savings and investments. I tend to reach my half-year savings goal within four months. Last year, however, emergencies popped up, and I had to use most of my savings. Only my long-term investments were safe and untouched.”

However, because Msimang and her friends had planned their trip in advance, they were able to devise a solution.

“We came up with the idea of saving for our January expenses. So, from October and November’s salaries, we need to save enough for our expenses when we return. Therefore, we can spend on our big trip home while still having money left over for January.”

Actions you can take

Budgeting can be difficult and time-consuming, but it’s well worth it, says Msimang. She learned this, among other things, from her father.

“When I was growing up, my father was very good with his money. He budgeted for everything. For example, when school closed for the holidays, he would use his bonus to settle my fees for the coming year, and buy me uniforms and stationery - all on the same day. Once that was done, he would enjoy the festive season.”

Even without a bonus, you can budget so that you can pay yourself at the end of the year, says Msimang.

Live within your means

No two years are the same, notes Msimang, and it’s important to be pragmatic about this. “Sometimes you’ll excel in your relationship with money, and sometimes you won’t – even with careful planning.”

“It’s important to live within your means,” she advises, “but not by depriving yourself of happiness. The festive season is everyone’s time to wind down and celebrate the year.”

This, too, she learned from her father.

“My dad taught me to enjoy reasonably and live within my means. You can set up a budget for the holidays and extend it to January. Write down everything you can do given your current budget.”

Knowing what you spend, and where, will give you a clearer picture of your finances. Msimang points to tools you can use that can help you budget.

“Technology is so advanced. There are plenty of budgeting tools that can help you track how you are using your money. They can also serve as a form of accountability when you live above your means.”

We all struggle with money at times, but with the right mindset and consistency, Msimang says, your relationship with your money will improve.

Tip: A personal loan can tide you over when your income is less than expected. Find out more here.