By CPA Samwel Baraka Ochieng
Why December is A Month of Reflection and Strategy
Christianity is the predominant religion in Kenya, with over 85% of the population identifying as Christian, according to the 2019 Kenya National Bureau of Statistics census. The country has approximately twelve national public holidays annually, with December having three public holidays, the highest number in any month of the Gregorian calendar.
Of the three, Christmas Day is the most celebrated, a day when Christians commemorate the birth of Jesus Christ, the leader and key figure of their faith. Christians embrace diverse traditions to mark this important day. Some take extended breaks and travel to countryside villages to reunite with loved ones, while others seize the opportunity to renew their faith in Christ through acts of charity, praise, and worship. For many, the season is joyful yet demanding as they are required to blend festivities with financial responsibilities. For the financially woke, however, December goes beyond a period of celebration to a season of financial reckoning and reflection—a time to review the year’s financial mistakes and prepare plans for the upcoming year. As Stephen Covey’s principle reminds us to “begin with the end in mind”, only a balanced financial plan suffices to adequately cater for the rising holiday expenses and cushion against the economic pressures that often escalate in January.
Those who are financially astute understand their income streams, prudently track and budget their expenditures, and develop plans that align with their goals and life aspirations. According to Investopedia, personal finance encompasses the entire spectrum of managing individual or family finances. It involves taking responsibility for the current and future financial condition, setting goals that align with personal life visions, meeting financial obligations, and saving for emergencies.
To be a good personal finance steward, it is important to diligently document every aspect of your economic life throughout the calendar year. In December, these records should be carefully reviewed, balanced and closed. This is a time of reckoning when the year’s spending, saving, and debt habits are assessed. It also presents an opportunity to evaluate personal financial health, adjust goals, and prepare for a fresh start. December is also a season to reflect on the successes of the fading year and forecast an even better year. It’s a moment to review and reflect on the calendar—what inspired versus what discouraged, what goals were met versus those that were missed, relationships that were nurtured versus those that were neglected, and what tasks were most enjoyable versus those that proved less fulfilling.
Financial reflection is the art of evaluating the individual’s year achievements and setting meaningful goals. December is vital in bringing these plans and forecasts for the coming year to life. Without this reflection, important decisions could be missed, and the risk of repeating past mistakes increases. Setting and sticking to realistic financial goals during hard economic times requires using a specific, measurable, achievable, relevant, and time-bound (SMART) goal framework.This tool helps you to track progress and stay motivated as you work toward your goals. To conduct a year-end review, one should gather all the financial records, including bank and M-Pesa statements. Then, code and categorise expenses to ascertain where most of your money went and identify areas of possible expenditure cuts to remain financially healthy. Evaluate your savings progress by comparing actual savings to your goals. A well-known quote by H.W. Shaw reminds us that “debt is like any other trap, easy enough to get into, but hard enough to get out of.” According to GeoPoll, a global leader in remote research, a rapid survey found that 80.24% of Ghanaians and Kenyans had borrowed money or taken on debt (https://www.geopoll.com/blog/the-financial-patterns-a-survey-on-loans-and-debts-in-ghana-and-kenya/). If debt is part of your financial reality, you should assess any outstanding balances and interest rates and adjust your financial habits to avoid insolvency and better align with your financial aspirations.
“If you fail to plan, you’re planning to fail”—it’s an age-old adage, but never trite when it comes to prudent financial management, especially during the festive seasons. Have you ever been caught up in the frenzy of December, when the rising expenses dictate the financial decisions? Do you have a personal budget? “A budget?” you might ask in disbelief. Absolutely. In personal finance, a budget is a simple but powerful tool that places you in charge of your money. Without a budget money may begin to control your actions as Natasha Munson said, “Money, like emotions, is something you must control to keep your life on the right track.” A budget isn’t about restrictions, but about erecting financial guardrails to control where your money goes after you’ve earned it.
Everything in life should be budgeted, whether its pursuit of inner peace, self-improvement, adventure, or financial independence, it all starts with a plan. December festivities bring joy, but they also carry the temptation to overspend in an attempt to create lasting memories. Without a budget, those memories rest on shaky foundations that leave behind more than just good vibes—often, they’re followed by financial headaches that can complicate the year ahead. Holiday seasons should be kept simple with realistic budgets that prioritise what matters and track spending. This approach eases the financial pressure, creates lasting memories, and offers a right platform of stepping into the New Year on firm financial ground.
In an age characterised by competing expenses, maintaining a firm grip on your finances is crucial for building strong personal financial health. A December financial review is essential as it helps to assess your financial position and provides an opportunity to adjust strategies for the year ahead. This entails creating effective schemes for emergency fund saving, improving personal investments, and planning for future financial goals. One definition of an emergency fund that resonated with me during one of the personal finance coaching sessions I attended is, “An emergency fund is a pot of money you can fall back on if you are unable to generate income to sustain yourself for a given period.” Ideally, life can feel like a rollercoaster, with many unexpected turns and twists. Job losses, delayed salaries, health issues, and pandemics like COVID-19 left a stark reminder of how uncertain this world can be.
December is a perfect time to reassess the financial safety net and ensure you’re prepared for life uncertainties. An emergency fund can be built by setting up a separate account and automating your saving processes. The automatic transfer from your checking account to the designated account ensures that a portion of the income goes straight into the emergency fund before having the chance to interact with the money. This can be a fixed amount or a percentage that aligns with your income and financial goals. The key is consistency. Regular, even small, contributions gradually build a buffer over time, flourishing even when extra expenses arise, such as during the holiday season as you remain on track and void of the temptation to skip contributions.
In the personal finance cycle, Covey’s principle of beginning with the end in mind challenges us to also end with the coming new year in mind. It’s perfectly fine to save for and enjoy the holidays, but planning beyond the holidays with future foresight is more rewarding. It allows you to break loose from the financial yoke and foster better spending habits. There isn’t a better way to put this thought than Will Rogers, “Too many people spend money they haven’t earned to buy things they don’t want, to impress people that they don’t like.” You should be aware that every coin placed in the right purse becomes a tool in hand to fight against the uncertainties of tomorrow. While the social pressure to impress others may come naturally, it should never stretch our financial limits or lead us into debt. As the celebratory bells ring in December, we should never let the temporary demands sear our financial conscience. Allow the rule of thumb of 50:30:20 to guide by allocating 50% for needs, 30% for wants, and 20% for savings. If you live within your means, you regain control of your financial life. Financial freedom is a product of consistent, mindful decisions with approaches that enable us to build wealth, invest wisely, and prepare for life’s eventualities. This is not about denying ourselves enjoyment today, but about making choices that protect our financial security tomorrow.
In light of the above, as the events of 2024 fade away into memories, think of your finances as a puzzle, where each piece of the whole must to be identified, recorded and aligned to fit for financial freedom. December financial reflection and strategy help you enter the New Year with a sense of security and purpose. Take time in December to reflect on your spending habits, adjust your goals, and review your financial plans. In addition, create an emergency fund, craft and stick to a budget, and manage your debt responsibly. These building blocks are principles that when intentionally applied, can improve personal financial health and establish a strong economic foundation for a prosperous and secure year ahead.
The Writer is a Member of ICPAK
