The head of consumer education at one of the banks was blowing off some steam earlier this week as she lamented about how people never plan for the festive season. “This is an annual event, we know we will be spending money, this does not come as a surprise yet every year people fail to plan”.
It is now only 45 days to Christmas so if you don’t have some plan of what you are going to spend or how you are going to find the money — best you but a plan in place now.
Write up a budget
Write down all the extras you will have to buy this festive season and how much it will cost:
- Who do you want to buy gifts for?
- How much is Christmas dinner or other entertainment going to cost?
- If you are going away how much will the holiday cost, have you added in extra for eating out or pocket money for the children? What about toll roads and petrol if you are driving?
Now look at your income and see if this amount is realistic. You may receive a 13th cheque but a portion of this needs to go to settling debts, school fees or savings so allocate only 20% of this to spending.
If your budget is more than you can afford start looking at ways to cut back, find innovative inexpensive gifts and ways to keep your holiday costs down. Here are some ideas:
Shopping: play them at their own game
Spread the spend: The retailers had Christmas decorations and wrapping paper up on the shelves before Halloween was even over. Stores know that this is going to be a slow December so they are trying to get to your pocket sooner than ever. The good news is that this allows you to spread your spending out over two months. This month stock up on Christmas durables like crackers, wrapping paper, biscuits and chocolates (although this did not work well in our house as the chocolates have already been eaten).
Also start buying gifts now, Christmas shopping in November means missing the crush of people and you are less likely to make an impulse purchase.
Be prepared: When you hit the shops, go with a list and just enough cash to buy what’s on the list. Lock the store cards away. Also, eat a good meal at home so you are not tempted to spend money on take-aways or extra food at the supermarket. Studies also show that we make better financial decisions when we are not hungry.
Beware of sales tactics: Beware of promotions or sales that draw you into a store you never planned on entering. Usually there are never sales items in your size but it leads you to make other purchases or buy something you don’t need because “it’s a bargain”. Don’t fall for the “buy now, pay later” in-store promotions for store cards. New debt is not part of your long-term financial plan. You don’t want to be paying for the gift months after the memory of giving it has faded.
Managing the children: Beware of the sweet isles which are the curse of any parent’s life and the graveyard of many diets. Eat before you shop and, if possible, leave the kids at home. If you do have your children with you, at least pretend that you have control of the sweet situation. Tell your children upfront that they can have a treat if they behave. That way it seems like you made the choice!
Save time: You can avoid the shops altogether by shopping online. Online stores like www.Kalahari.com or www.takealot.com are often cheaper and you will resist the temptation to buy stuff you don’t need. If you have a specific gift in mind, phone the store first to see that they have the item before driving there. Also speak to people in the office and friends about gifts they are buying. They may give you some great ideas.
The gift of time: For some people time is more valuable than a present which will just take up space and which they don’t need anyway. Give an IOU for a dinner out or a movie or offer your children a day at the ice-rink as a gift.
Get creative: A great gift for teachers and friends is to buy a jar from Pick ‘n Pay with a blackboard label on for R20 and then fill it with homemade biscuits. You can write your message on the blackboard with the chalk which is included.
Manage family expectations
Have a meeting: Sit down with your family and discuss your plans for December. This year it may be a tighter budget but talk about how grateful and fortunate you are as a family to have some money and how you are going to enjoy it rather than focusing on what you don’t have. Put a big white board in your kitchen and write the amount you have to spend. Discuss how the family wants to spend it — gifts, entertainment, holidays etc. This will make it real and help you to stick to your budget on a daily basis. Write down every day what you have spent and what you have left.
Set a gift limit: Make a social contract with your extended family on gifts and entertainment. Everyone is in a similar situation, so be honest. Rather than buying gifts for everyone, pool your resources and buy one gift for each family member. Remember one small gift that has a special meaning is worth a lot more than how much you spent on it.
Don’t forget January
When putting together your Christmas budget, don’t forget your January costs. There are school fees, uniforms and books to buy. This all needs to be included in your budget. Most people are paid early in December which means your paycheck on the 15 December has to last until the end of January. The only way not to blow the lot is to budget. Also consider paying some of your January bills early as well so that the money is not available to spend. If you are going away around the end of December, paying your bills early will also mean you don’t pay late and incur penalties.
Get ready for the next festive spend
Put a jar in your kitchen labeled Christmas 2012 and put all your loose change in there. You will be amazed how much you will have saved within 12 months.