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?

Hmmm