Paymenow MD Deon Nobrega on how to help employees to make it to the end of January without burdening themselves with debt.
December is undoubtedly one of the toughest months to get through, and there seem to be endless weeks between that paycheck in December and when salaries land at the end of January.
On top of which, there’s a large amount of spending to be done in between salary one month and payday the next. Depending on what and how you celebrate, there are presents, festive meals, get-togethers with friends and families, holiday travel and, of course, all of that back to school expenses come January.
Just keeping up with the basics is tough on most of us at the moment, coming up with the funding for extras (with or without trimmings) means that expenses can well add up to more than what lands in the bank account.
Then there are, as Sanlam has found, psychological reasons why consumers spend more over the festive season.
One is because it’s summer, and it’s so much easier to spend. “According to scientific studies, increased exposure to sunlight puts us in a better mood, making us more likely to spend, and spend more per item.
“Summer days are also longer which means even more opportunity to exercise our wallets.”
Then there’s the heat, which means running a fan will be a must, but this pushes up the power bill. Because it’s the festive season, we also feel a need, nay, an urge to spend more: to spoil the kids and our partners with items we normally wouldn’t buy. Even if this isn’t a big-ticket item, like a TV, mall items (such as ice-creams or soda) can really add up.
We also feel the need to go all out when it comes to festive season catering, putting roast items on the table that we normally wouldn’t. While this often means food for days afterwards, people get tired of leftovers and this soon ends. Catering for a really luxurious meal can break the budget on its own.
Sanlam also points to what it calls “festive FOMO” – the fear of missing out on great deals that entice us into spoiling those we love with extra gifts under the tree. This is especially possible when retailers have limited time or limited stock offers.
Then there’s a failure to plan and having to shop under pressure, which means trying to get out of shopping malls as quickly as possible; grabbing something on impulse without shopping around.
To avoid these pitfalls, financial advisors and banks advise consumers to start their shopping early, draw up – and stick to – a budget and plan exactly what to spend cash on.
Help your people
Employers too have a role to play when it comes to helping their people make it from their December salary to the end of January. Especially if the December payment is made halfway through the month, instead of the end as is usual.
Employers need to start planning now because the last thing anyone wants is to start a new year with colleagues who are not being productive because they are too stressed about making ends meet, or worried about masses of incurred debt.
The first way firms should do this is by running financial literacy programmes – offer these to staff during break times. If there isn’t a suitably qualified person in the company, such as an accountant, ask a financial advisor who may be willing to come in for the free marketing.
Who knows, the financial advisor and your staff may benefit if they have a better insurance plan, or a higher interest rate for investments.
These programmes should address aspects such as budgeting, compound interest, drawing up a budget and sticking to it, as well as the pitfalls of debt.
If there’s an employee who often needs a salary advance, or is vocal about being in debt, you could also take them aside for an empathetic chat.
No employer or boss likes to see his or her employees struggling with debt. Many of us may well have been there, or done that and have learnt many lessons on how to deal with debt.
Although we don’t want to seem overbearing, or interfering, a staff member who is stressed about debt is more likely to get sick, losing productive days. They could also spend more time worrying than working and may even resort to stealing from the company.
No-one wants that.
The way to go around this is not to discuss the issue in front of the entire company, but rather pull them aside. Be sincere that they may be having financial issues that worry you, and be prepared to listen empathetically.
Don’t presume you know what the problem is, or how to fix it, but do offer tools that they can potentially take advantage of.
After all, being the boss is more than just paying salaries and earning a profit, there’s also a need to ensure your staff are happy and productive.
