THIS CHRISTMAS SEASON, let us hold firmly onto the principle of wise spending, carrying it forward into 2017, when we will add further tactics in strengthening our finances. Let us all commit to limiting the outflow of cash during this festive season.
Limiting the outflow of cash also includes limiting adding any additional debt or commitment to pay later. In spite of getting together with family and friends for the seasonal celebrations, shows, meals, drinks and fun times, we are all committing to keeping a tight rein on our cash outflow.
The most effective approach to managing our cash at Christmas is to prepare and work closely with a budget. This is a tried and proven way of getting through the Christmas season without getting financially drunk.
This budget should reflect both our expected income and planned expenses. When it comes to expecting a bonus or a similar money gift, it is important to be extra conservative and discreet. Then before we start allotting the expenses, decide what proportion of any additional cash we will save and invest.
You may decide to spend, say, 50 to 60 per cent, or even 100 per cent of your conservative estimate of your extra earnings. If you have a special project in mind, you may even decide to save all.
For some people, there may not be any extra income at Christmas. Yet, if they have been relatively consistent in maintaining their budget all year, they may elect to spend an additional amount just this one month in order to make Christmas special.
Then, having designated the income part of the budget, the maximum spending limit for the season will be apparent. Next, follow a list of all your planned spending. In as much detail as possible, you should list the individual expenditure on all the extra Christmas fare, from the furniture and appliances to the Christmas cards and gifts.
Preparing a budget gives you an understanding of what you can afford. Communicating this to friends and family is an important part of the process. If you are under unusual financial stress this year, talk with your family and friends. They may be as relieved as you would be to arrange a gift exchange instead.
Alternately, another reasonable way of reducing the gifts is to declare, up front, that you will be only giving to children, say, under 18 years of age. Once expectations are made clear, there appears to be less chance of disappointment. So, a basic ground rule for preserving goodwill and peace is to discuss and agree on any unusual gift behaviour with the planned recipients early.
It is useful to set a price range within your budget for each gift before starting to shop. Sales clerks are quite helpful with ideas when you can tell them your price range. It is also one of the best ways to stick to your budget.
You can stretch your budgeted spending by considering gifts that are not hard on the pocket. For example, you can arrange a joint outing to the beach or cinema for children.
Even a drive to enjoy the lights will be appreciated by the most bored of youngsters.
If you have the time and interest, home-made gifts such as cakes, jellies and other crafts items can make precious presents. Arranging a get-together for family and/or friends and serving the food and drink of the season can be your special treat.
Alternately, the gift of a personal/beauty care service is different and usually cheaper than a store-bought gift.
Many adults would be touched to receive just a special card enclosing a sincere letter of love and appreciation. Also, consider the precious gift of your time, service and knowledge by committing to doing a special chore or service for a week, month or even the entire year to come.
In all your giving, do remember those in need, the homeless, the shut-ins, the sick, the disabled, the hungry and the abused. Do include charity in your budget.
Louise Fairsave is a personal financial management adviser, providing practical advice on money and estate matters. Her advice is general in nature. Readers should seek advice about their specific circumstances. Email: LouiseFairsave@nationnews.com.