It’s easy to get caught up in the holiday spirit and blow a wad of money. Here's how to avoid that trap and keep your finances in check this holiday.
The holiday season is a time of partying, eating, drinking and off course shopping. It’s easy to over-extend yourself financially during this period if you’re not prudent.
We’ve got a plan to enable you to make the most of the silly season without getting yourself into a debt trap.
Decide on your budget:
Setting a holiday budget before you begin your festive shopping is always a smart move.
Allocating a budget for the holidays will enable you to minimise overspending and avoid unnecessary purchases.
Not sure how to calculate this amount? Start by looking at your existing budget and how much you normally spend each month.
Once you’ve accounted for all your regular monthly expenses, combine the remaining amount of spend you have left over with any extra money you may have saved up for the holidays, to gauge how much you can realistically afford to spend.
Make a list of your holiday expenses. Be sure to include any gifts that you intend to buy, travelling expenses, charitable donations, as well as food and entertainment costs.
Once you have compiled your holiday list of expenses, divide the amount of money you have allocated for the holidays between each of the categories on your list of expenses.
If there's a shortfall in your budget, revisit your list and have a look at where you could possibly scale back.
Track your spending habits:
Drawing up a budget won’t be of much use if you don’t stick to it. Tracking your spending is one of the easiest ways to avoid exhausting your holiday budget.
This can be done by keeping the receipts of all your holiday purchases and adding them up at the end of each day to keep track of the remaining amount you have left to spend.
Alternatively, you could also compile a digital spreadsheet of your day-to-day spending on your smartphone to make note of all your festive purchases. This is useful as it can easily be updated while on the go or waiting in line to pay at the till.
There are also a variety of easy-to-use money-management apps available for most smartphones. These can be downloaded to your phone to help you stay under budget while you shop and keep track of your progress.
Stick to your shopping list:
We’re all guilty of indulging a little more than we should simply because it’s the holiday season, but too many unnecessary purchases can eat at your budget.
It is important to make a conscious effort to stick to only purchasing the items on your list of holiday “must haves” as too many unnecessary purchases can become financially draining.
Avoid impulse buying and frequenting the mall “just to see what they have”.
Once you’ve ticked everything off your list and you’ve checked it twice, it’s time to stop shopping.
By planning your holiday purchases, you can be spared the holiday hangover come January.
Avoid using credit to get through the season:
The biggest financial killer for many people during the holidays is the reliance on credit cards to get through the festive season, particularly when it comes to buying gifts.
Consider doing a cash-only Christmas and avoid the temptation of shopping with credit.
Leave your credit cards at home and only use the maximum amount of cash you are prepared to spend when you’re out shopping. Doing so will help to ensure that you don’t enter the new year with an even larger sum of accumulated debt.
It is also important to be cautious of any festive deals that entice you to buy on credit as these can often end up costing you more in interest repayments later down the line.
Spend your Christmas bonus wisely:
The end of the year is the perfect time to readjust and keep track of your financial goals.
If you get a year-end bonus or a 13th cheque, you might elect to put that money towards your home loan or add it to your retirement fund.
Alternatively, the extra funds could be deposited into a tax-free savings account and serve as additional financial security.
Whichever you choose, this will not only help to ensure that you are spending your money wisely, but it will also provide a cash buffer to fall back on, should you face any unexpected costs over the festive season.
Save for the month ahead:
The month of December can become an expensive one, from purchasing gifts, decorating the house, and catering for lavish festive dinners with the family.
Many people often get caught up in the festivities and forget that they still have to budget for additional start-of-the-year expenses once the festive season draws to a close.
The “back to school” season in January is one of the biggest start-of-the-year expenses for many households with kids.
Many often forget to set aside additional funds to cover the costs of school fees, uniforms, textbooks, and stationery supplies.
Before you begin Christmas shopping, be sure to note down any expenses you may have for the month ahead and set aside some extra cash to avoid a debt hangover once the new year rolls around.
Avoid splurging on holiday décor:
Adding a festive touch around the house is always one of the best parts of the silly season, but don’t let the fun and excitement of decorating your home blow your budget.
Give your finances a break this year by recycling your festive decorations from the previous year.
Making do with the holiday décor you have accumulated over the years is one of the easiest ways to save money during the festive season.
Be sure to properly pack and store away your festive décor once the season is over to keep your decorations in good condition. Another great way to save on decorations is to make your own festive ornaments.
Purchasing some glue and an assortment of colourful glitter from your local arts and crafts store, you can transform simple items found around the house into your very own handmade holiday decorations. Crafting your own decor is not only a cost-effective way to save money but it’s also the perfect opportunity to get the kids involved and put everyone in a cheerful mood.
Get creative with your gifts:
Purchasing gifts for your loved ones can be an expensive affair, especially if you’ve got a long list of names on your list.
To reduce costs and save some extra cash, you could purchase less expensive items, or consider creating homemade gifts that offer a personal touch instead.
This could be anything from their favourite baked biscuits, or a personalised scrapbook / photo collage, a knitted scarf or even a handmade bracelet or necklace.
Homemade gifts offer sentimental value which is difficult to find in any department store.
If you are unsure of what to craft, consider looking for ideas online and plan ahead so you have plenty of time to create them.
Consider new traditions:
While festive traditions make the holidays a special occasion, they can sometimes become financially draining.
If your festive traditions include spoiling your loved ones with extravagant gifts or going on holiday, then you might find yourself going significantly over budget.
Traditions help to build fond memories, but they don’t have to be excessively expensive to be memorable or special.
Consider creating new festive traditions that the whole family can enjoy which won’t cause too much damage to your pockets. By initiating cheaper traditions, you will be able to save money without having to skimp on enjoying the festivities and creating memories.
There are ample ways to get into the holiday spirit without breaking your budget, consider these options:
Watching a festive movie at home with the family.
Taking the kids to see Santa at the mall.
Baking festive treats together.
Hold a family dance-off at a family gathering.
Celebrate the season with a games night and bring out your best board games.