‘Tis the season for giving….but sometimes it feels like what we’re handing over most of all is our credit card.
Christmas is the most expensive time of year. The sight of Santa in the shops makes the kids happy but our wallets twitch nervously. According to ASIC MoneySmart, more than one-third of Australians reach for their credit card around Christmas time, racking up an average debt of $1,666.
The best way to avoid a financial hangover in January is to plan carefully, set a budget for the Festive Season and form good spending and saving habits throughout the year. If you’re worried about the strain on your finances this December, here are five ways to get your finances in shape for 2019.
1. Plan, plan, and more planning
Let’s face it – thinking about a year’s worth of spending is a daunting task, but it does help you get a clearer understanding of when the most expensive periods of the year are. That way, you can plan accordingly. For example, including annual bills such as car registration, school fees and insurance in your budget can make it less of a shock when you receive them in your inbox or letterbox.
2. Save then spend – not the other way around
Now that you have a 12-month financial outlook, you can set up a regular savings plan. It’s easy to get into the habit of putting aside savings from whatever is left from each pay, but it’s better to save before spending. The easiest way to do this is to set up a direct debit from your everyday bank account, scheduled for each payday. With a fixed amount automatically transferred to your savings account, you’ll be able to grow your balance without even thinking about it.
3. Budget for the big buys
Planning to buy a new car or go on an overseas trip? It’s important to be realistic about how much it will set you back. Overestimating the cost is always a good idea so you don’t get caught short. This way, you’ll probably be left with a little cash left-over to add to your savings. Needless to say, shop around for the best deal before committing to buy.
With your cost figured out well ahead of time, you’ll be able to calculate how much you need to save weekly/fortnightly/monthly to achieve your goal.
4. Resist the urge to splurge
In the movie “Confessions of a Shopaholic”, each time compulsive shopper Rebecca Bloomwood looks in a shop window she can’t resist buying something. Her bad habits almost lead her to bankruptcy.
If you don’t keep an eye on your spending, the urge to use your credit card can take over. Almost one in five Australians are behind in their credit card repayments. Avoid the stress of debt by waiting until you’ve saved up enough cash to pay for a purchase outright. If that’s not possible, you might like to consider alternative payment plans like Afterpay, where the money is deducted from your account in four installments following a retail purchase.
5. Cut Back or Make More Money
As tragic shopper Rebecca Bloomwood was advised, either cut back or make more money. If making more money isn’t possible, prioritise your spending. This is especially important during expensive times of the year, like Christmas and the start of the school year. If you’re a generous gift-giver, you’ll need to tighten your belt in other areas so you don’t blow the budget. Examine your regular spending and think about how you can trim it. Do you have a daily coffee habit? If you stop buying coffees during December you’ll end up with potentially an extra $100 in your wallet to spend on gifts.
Still feeling overwhelmed? When it comes to getting your finances in control, one of our qualified and experienced financial advisers can help you create a budget and savings plan that works for you all year round – and well into the future.