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Black Friday Or Red Friday? by ElectGINeer(m): 10:06am On Nov 25, 2015 |
It seems Black Friday has come to stay. Power
is going to ‘change hands’ this weekend
heading into next week.
A lot of people are going to make tons of
money. Cash registers will ring non-stop while
phones and email boxes will be buzzing with
credit alerts (and debit alerts). Many will smile
all the way to the bank while others will be
left with merchandise, happy they got it on
sale but wondering if they did not encroach
into other budget items. Some schools are still
sending reminders to parents to pay up first
term fees and before you say ‘Jack Robinson’,
second term fees will fall due. One thing is
sure this season; it will be Black Friday for
some and Red Friday for others. What is it
going to be for you? Black Friday or Red
Friday?
Black Friday, which originated from the US is
gradually becoming a global phenomenon.
Local retailers and banks have jumped on the
bandwagon, creating hype and asking their
customers to save by spending using their
cards. One bank offered to help you save by
setting aside a portion of your spend in a
dedicated savings account, so the more you
spend, the more you save! You earn points by
spending on your card, so rather than save
directly, do it indirectly by spending! It makes
me wonder what amount of spending will
generate enough savings to cover your bills in
January when the dust settles.
Saving on planned purchases
Am I against Black Friday? By all means no.
It is a very good opportunity to pick things at
a bargain price. One key way to cut your coat
according to your clothe and make your
disposable income go round is by timing your
purchases. The best time to buy an umbrella
is in the dry season. The best time to buy
summer flight tickets is at low season. The
best time to buy summer clothing is at the
onset of winter. There are times when retailers
have sales. If you understand the trend, you
can get things on sale by waiting for the right
time, so that you end up spending much less.
This is where Black Friday fits in beautifully. If
the item is something you planned for and
saved towards, then you may be able to get it
at say half price. There are times of the year
when cars are cheaper, as dealers try to clear
off late models from their showroom to bring
in the latest models. It is the same with
household electronics. I typically target those
windows to make big ticket purchases and
save a lot of money in the process. This
essentially means you have a plan, and simply
wait for the right time to execute it. If you are
prudent, you don’t buy things simply because
they are nice to have and are on sale. You
cannot save by spending no matter how much
the price is reduced. You simply end up with
less money in your pocket, and stuff you may
never get to use. That is a classical case of
‘cash to thrash’. I have had to dispose of
things bought years back but never (or hardly)
used; occupying space, gathering dust in the
store and becoming a hiding place for
cockroaches etc. You save when you pay less
than what you budgeted for and keep the
balance for investing. If you spend the
balance, you have not saved. You simply
bought more stuff
Do you have a plan?
Black Friday is a very good opportunity to
save if you have a plan. Have a list of the
things you want to buy and shop for the best
prices. There are price comparison and deals
sites now available online. Make sure you are
comparing apple with an apple.
You have the option of shopping online or
going physically to a store. I prefer shopping
online, as the stress of joining the crowd,
parking etc can make it a stressful experience.
Sometimes a fight may break out in the store
as shoppers scramble for things (I wish
people scrambled this way when it comes to
financial education). The main challenge I
have with online shopping is getting exactly
what you want. The picture online may look
very attractive, and by the time you open the
package, what you see looks much more
humble. I have had an experience where I
ordered a fridge online but when it was
delivered, some features were missing.
The important thing is to have a plan and
stick to it. Don’t go above your budget.
Rather, find out if you can get it for less. If
you don’t have a plan, you will be prone to
impulse purchasing. You may become more
focused on price reduction than getting what
you actually need. It is very easy to go home
with things you never planned to buy in the
first place.
Show me the money
What determines whether this season will be
black or red for you depends on cash flow. If
more money is going out than coming in, you
will see red. If you spend what you planned to
spend, or a bit more, you have not saved
money. End of story. If you think you have
saved money, when the holiday season is over,
show me the money. Well, you don’t have to
show me. There will be people who will be
interested, and will be knocking on your door
in January.
If you cannot show the money you saved
sitting pretty in your savings account, Black
Friday has simply given you the opportunity to
get more stuff with the money you budgeted.
The house wins. If you cannot see the money,
the trick is on you. Like the game of musical
chairs, if at the end of the day the retailers
end up with all the money and all you have is
goods, the joke is on you. Like the saying
goes – if the person with money meets the
person with experience, the person with the
experience ends up with the money while the
person with the money ends up with the
experience. The catch is in the direction of
cash flow.
Tomorrow will surely come
It is a season to be merry, and my favourite
time of the year. Life is sweeter when you
have money to spend as you want. However, it
takes a while to get to that place. I keep
getting asked ‘if you keep saving all the time,
when will you enjoy?’ The purpose of saving
and investing is to generate cash flow you
need to live life on your own terms – making
a difference while enjoying yourself. Living
your dreams is not cheap. To get to that
place, you need to practice delayed
gratification and build a proper foundation.
You are saving and investing today because
of the tomorrow you desire.
Tomorrow will surely come, whether you
prepare for it or not. In January, school fees
and house rent will beckon. January will ask
you what happened to your December salary.
Will you be smiling then? For you, is it going
to be Black Friday or Red Friday? 1 Like |
Re: Black Friday Or Red Friday? by Isewa: 6:37pm On Nov 25, 2015 |
Hmmm |
(1) (Reply)
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