Don’t blame January, seek financial literacy

Since the year begun several people have blamed January, yes the month of January, for the financial hardships they are experiencing.
At some point during the month, a TV station invited me for a live talk show about the financial difficulties people face.
When January 31 came, some folks vowed to stay awake until midnight in order to ensure that January did not add the 32nd day!
In view of all the complaints against it, I conducted a thorough investigation to establish if indeed January was responsible for the financial troubles that people were experiencing.
I also determined to know if those money problems would miraculously disappear once we got into February. My findings were very surprising and shocking too.

Findings
I found that the reason many people were financially hard up in January was because they spent the equivalent of three to five months’ income in December alone.
One month’s income was spent on the usual monthly expenses and another month’s income was spent on New Year’s celebration. The rest of the money was spent on Christmas festivities.
I then asked where all that money came from and I was told that a few lucky people got a 13th month cheque during December.
Other people had saved some money which they topped up with the December income to cover the expenses for Christmas and New Year’s festivities. The majority of the people borrowed; either borrowed cash to pay their way through the festive season or borrowed in kind.

Salary cycle
The way the financial cycle of a salary earner works is that they get paid at the end of, say October, and use that money to cover the expenses of November until they are paid at the end of the month.
Now in December many people disrupt this cycle; they use both the November and December pay within the month of December.
So apart from spending money that is more than a month’s pay they enter January when they do not have any money.
February is usually touted as the month of financial wellbeing but my findings about it was as troubling as the findings about January.

Money lenders bite
I found that February is the month when many money lenders intend to tighten the screws to collect overdue interest income and principal. It is also during February that schools are opening for first term.
For that reason, January was not responsible and was thus not to blame for the financial difficulties that many people have experienced.
For many of the complainants, the financial difficulties would continue beyond February and a good number of them run the risk of entering the debt trap.

Who to blame
If there is anything to blame for the January financial blues, then it is a particular person’s lack of financial literacy.
If people could spend a bit of time and money reading financial books and other forms of literature or engaging with financial coaches, they would plan, manage their money better and halt the slide along the slippery path to financial doom.

Meaning
Financial literacy.
It is the ability to understand how money works in the world; how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. On the other hand, financial literacy is the confluence of financial, credit and debt management and the knowledge that is necessary to make financially responsible decisions - decisions that are integral to our everyday lives. A lack of financial literacy is not a problem only in emerging or developing economies but worldwide.