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The silly season has not just begun, it’s more than half way over. Even though Christmas is just around the corner, it’s never too late to bring some kind of order to your financial behaviour. If you’re known for blowing the budget at Christmas time or your financial situation needs some scrutiny, this is a marvellous opportunity to change your habits and take stock. We’ve got a few tips to help you minimise unnecessary spending in the lead up to Christmas, and then a few ideas for a financial review once everything calms down.
Remember when you were small and wanted to buy Christmas presents for your family? Money was hard to get and easy to spend. You’d do jobs around the house, save up money and allocate amounts to each person. Just because you’re not a child anymore, there is no reason why this habit shouldn’t continue. When it’s time to do the Christmas shopping, list who you have to buy for, decide how much you’re spending and stick to your budget1.Going Christmas shopping without a plan is one of the worst things you can do if you’re trying to save money. You are far more likely to make impulse purchases, spend more and come away with only half the items on your shopping list which means yet another trip to the shops and possible panicked purchasing as Christmas gets closer. Don’t do it. Plan ahead and stick to it.
Crazy sales days like Black Friday aside, online buying does have advantages, bulk purchases often result in reduced or free postage, you can receive discounts for signing up for e-newsletters and you can sometimes access a wider range of stock than you can in store. Plus, you can shop anytime, you don’t have to fight for a parking space or battle your way through the Christmas crowds at the shopping centre. It’s perfect for those who are time poor, or have small children.
Of course, certain items (seafood!) can only be purchased the day before Christmas or you’re asking for food poisoning. However, many other Christmas treats and items can be purchased in advance. An extreme version of this would be to buy your Christmas crackers in the post-Christmas sales the year before.Even if you find uber-early cracker purchases a little too much, you can still save money by being aware when items you’ll need are going on sale, buying them in advance and putting them away until you need them. For example, if your favourite Christmas bubbles go on sale, buy half a dozen and put them away. This beats last minute panic purchases when nothing is on sale.
For grandchildren or even your own kids, giving cash is often considered a cop out, and ‘real’ presents are seen as having more thought and care because they are chosen and wrapped. Don’t overlook the value of cash as a gift. Kids who receive cash can learn a lot from having power over their spending. They can learn about having different uses for their money, and set up a system to save, spend and give a portion of their cash to charity.They can also learn from experience how to discern between a wise purchase and a frivolous one, which purchases give just a short-term buzz and which ones provide more long-term enjoyment. If they’ll listen, you can even give them a lesson on the benefits of compound interest.
Depending on where you are in your financial life story, and what goals you and your financial planner are working towards, you might choose this time of year to do something new with your investments. You might choose a goal to save towards, or to change your investment mix, or to reduce your spending.In the down time that often occurs after Christmas you might turn your mind to a review of your financial situation. In the lull of the New Year, spend a little time thinking about your financial status, and when your financial planner returns from their well-earned Christmas break, be ready with a to-do list.It could include the following:Review your insurancesSpend some time making sure the amount you have insured for home and contents matches your actual home and contents. Do the same with your health insurance, a phone call to check you’re covered for items that are relevant to your circumstances could save you money. Check on your life insurance, make sure your lifestyle factors are accurate and you’re paying for the cover you want. Have a look at your car insurance too, even changing simple details like garaging details can result in savings on your premiums.Check your mortgageThe early weeks of January can be an opportunity to contact your bank and ask whether they can offer you a better mortgage interest rate on your residential or investment property (you’d be surprised what they’ll do if you just ask the question).Adjust your goals to match your current situationA year is a long time, and rarely does one go by without a significant change that affects their financial situation. It could be a new job, a new baby, a new home, new investments, children starting or finishing school, external market fluctuations, illness (or death) in the family, or family members needing financial assistance. These are all significant life events which should trigger a review of your financial planning status. Done in conjunction with your financial planner, you will find an annual review is an excellent way to keep your financial goals on track.And finally, pay your credit card bill in fullIf you can, this is crucial. Credit card interest is very high. Savvy spenders use credit cards to take advantage of the fact that they can stretch time between taking a purchase home and the money leaving their bank account. However, this only works if you pay the bill in full2. Paying minimum payments simply means your debt is growing every month due to interest and you’re barely keeping on top of it. If your Christmas shopping spend is so big that you can’t afford to pay off your card in January, you probably should chop up your card (or at least hide it away for a period of time).
The Christmas holidays are a weird mix of frenzied activity in the lead up to Christmas, and enforced downtime the week or so after. Both periods can lead to overspending, both in pre-Christmas extravagance or post-Christmas sales madness. Reducing impulsive behaviour at the shops will go a long way to curbing unnecessary spending and keeping your budget on track. Spending some time after Christmas undertaking a review of your financial situation will set you up beautifully for the year ahead. Paying off your credit card in full is the best post-Christmas present you can give yourself.Sources:
This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.