Jerrold Johnson
Contributor

Each Christmas season, we have important decisions to make with regards to our finances. This year we also have the uncertainties of financial markets overseas and their influences on our prices and inflation.

This should lead us to consider how we should approach the lump sum we may receive during the season. Some of us will be receiving bonuses, some retroactive salary payments, and yet others, redundancy payments. Most of us are aware that challenging times are ahead. I suggest, therefore, that we all approach this season with careful preparation: Ensure that your funds are put to good use, and do not merely slip through your fingers.

Remember, chances are, that the lump sum payment you may receive is your hard earned money. You may have risen early many mornings to board public transportation or driven yourself through heavy traffic to arrive to work on time.

Maybe your strong work ethic had you at present at work even when you didn't feel like going in. Perhaps you put in extra time to get the job done well. In short, this lump sum payment is your reward for your diligence and hard work. So consider well before you spend the first dollar.

It could be to your greatest advantage to invest the entire additional payment you receive. However we know that is highly unlikely. So here are some tips to help you avoid spending of all your money in the Christmas season.

Before your lump sum payment is deposited into your account, make plans for all of it:

1. Decide how much money would put aside for savings. This is money set aside for either emergency purposes or particular goals that you are working towards (for example, the down payment on a real estate, your annual car insurance payment, a family vacation and school fees.)

2. Decide how much money you will invest. This is money you are putting to work for you, in the medium to long term. These funds could be invested in stocks, mutual funds, tax-free investment accounts, Government/Bank of Jamaica instruments, business ventures and so on. Consult a financial advisor to assist you in making the choices which are right for you.

3. Decide how much money you will allocate for general spending. This portion of your lump sum payment is used just as you would like. You may wish to reward yourself with something you've wanted for some time or to reduce a debt.

However you choose to spend your lump sum payment, think beyond this Christmas and consider investing your money rather than just spending it. These lump sum payments can be used to your advantage, all it takes is a plan. And remember consultations with your financial advisor are usually done at no cost to you. So allow the one you choose to assist you in putting any your lump sum payments you may receive to its best use.

Jerrold Johnson is a Financial Advisor at JN Fund Managers Limited. He may be contacted at Jerrold@jnbs.com.