Like a flash, Christmas will be upon us . . . and it is looking like a tight Christmas.
Our hopes for a happy holiday season will be supported by less cash and more stress. How do we reduce stress while rekindling the spirit of joy and add financial ease?
Christmas is the time for renovating and decorating the home, enjoying the food and drink of the season and giving gifts to family and friends.
Christmas spending is much higher than that of the same period in the other months. Employers cooperate, too, by providing pay advances or bonuses during December. The problem with many shoppers is that they tend to go overboard and spend more than they can afford. When one succumbs to the urge to splurge, then the financial stress sets in.
The first and most important tactic is to plan early by starting to save for this extra spending period. The tried and proven way of planning for the Christmas season without getting spending-drunk is to prepare a budget well in advance. When it comes to expecting a bonus or a money gift, being extra conservative and discreet is essential.
It would be best to be consistent in maintaining a budget all year round. Such discipline would make it clear exactly what spending limits that budget can tolerate. The struggle is to stick with the budget limitation. This struggle is so even for people with high earnings.
The year-long budget would also point to how important it is to save extra during the prior months, say from September, in order to help December to be more bearable. Some people set aside savings for the Christmas holidays while others start to shop for gifts and other Christmas fare from those earlier months.
Next, follows a list of all your planned spending in order of priority. This approach helps to settle the limits of prospective spending: when the estimated cost of the list reaches the planned spending in the budget, all other items on the list fall by the wayside. Yes, priorities might be reviewed but the costs cannot exceed the budgeted amount available.
In fact, a contingent amount of the budget should be held in reserve because Christmas is a time of surprise visits and get-togethers and nobody wishes to be embarrassed due to lack of funds.
It is important to communicate your plans early to family and friends. They may be as relieved as you would be to arrange a gift exchange rather than have gifts for everyone. Another reasonable way of reducing the spending on gifts is to declare up front that you will be giving only to children.
Then, only buy a gift that you can afford. 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. Shop around; check prices online or even shop online. Be relentless in finding ways to stick to your budget.
There are always deals and giveaways during the season. Carefully consider them. Use of short-term credit or of a credit card is recommended once the delay in full payment will only be for a month or two.
Such credit serves as an alternative to savings over the prior month by drawing on the month hence of Christmas. However, given the hefty charges on credit card credit and on consumer loans, every effort should be made to limit the related interest cost.
Where the credit card is used mainly to accumulate reward points and yet avoid interest charges, then that shopper has truly gained a bonus.
• Louise Fairsave is a personal financial management advisor, providing practical counsel on money and estate matters. Her advice is general in nature; readers should seek personal counsel about their specific circumstances.
