Features - Festive season survival tips for your finances
The festive season can be a busy and sometimes costly time of year, so we've put together a few tips to help you and your finances enter the new year intact!
Survival tips for your finances
It's not too late to form a special budget for buying extras at this time of the year, such as presents and celebratory food. Indeed, a bit of forethought can help you avoid a major blow out! If you plan your extra spending you are more likely to set realistic and affordable limits for yourself and then stick to those limits.
Reduce your outgoings wherever you can to help accommodate the extra expenses you might incur. So, look carefully at your spending and plug any spending leaks you may have. (Refer to our spending leaks fact sheet for more information).
Use credit cards and store cards as little as possible for accommodating extra spending, or better still - not at all! Getting carried away with credit can be easy to do in December and January, especially when those post-Christmas sales begin, but the reality of an oversized credit balance or overdue bills soon sets in once the first statements and reminder notices start arriving.
Shop around when buying presents in order to find the best deal. That doesn't mean you have to buy the cheapest presents you can find - it simply means comparing prices in different stores before making your purchase in order to find the best price on offer.
The pressure to buy is at its strongest at this time of year and it's easy to be tempted by things we simply don't need. If you're on a tight budget, take a list when you go shopping and take only as much money as you'll need to cover those items. For example, if you're concerned that you might be tempted by the department store sale on your way to do your weekly grocery shopping, leave your credit card in a safe place at home.
If you really must take out a loan or higher credit limit to help you afford the festive season and all its trappings, be they presents, food for a festive season feast, or a summer holiday, don't do it unless you have clearly worked out your limit and how you will repay the debt over the coming months. If you cannot repay the debt in a realistic time frame, it may be better to rethink your plans and perhaps lower your expectations, rather than be lumbered with a debt that could plague you for many festive seasons to come.
Last but not least, don't forget that utility bills and mobile phone bills don't take a summer holiday - all of your usual expenses still need to be covered, even if it is the festive season.
Quick tips for shoppers
Stick to your budget
Don't buy what you can't afford to repay in a realistic time frame
Always shop according to a list
Never go food shopping on an empty stomach!
The New Year wash-up
Step 1 - assess the situation
Make a careful assessment of the situation. Exactly how much debt have you accumulated? And what money do you have coming in that you can put towards that debt?
Step 2 - can you make some changes?
If you don't have a budget, create a budget and see if you can come up with a realistic plan for tackling the repayments you need to make. (Refer to our budgeting fact sheet and budget planner for more.)
If you already have a budget, can you make some changes so that more of your income goes towards paying off your extra debts?
Step 3 - seek help if you need it
If you can't see a way to pay off the extra debts you have incurred, or if you are already looking at getting another credit card or personal loan to help accommodate what you owe, consider seeing a financial counsellor for help with restructuring your finances, tackling your debt, and avoiding the same traps next festive season. You can find a financial counsellor in your state by visiting the website of the Australian Financial Counselling and Credit Reform Association (AFCCRA) (www.afccra.org).
Above all, if you have a bill that you cannot pay, or a repayment that you cannot make, contact the organisation that issued the bill or statement as soon as possible. Quite often, extensions on payments may be granted, or debt repayments may be restructured, but usually only if you alert the organisation to the problem as soon as possible - and preferably before you miss any payments.
Think ahead for next year...
Is there anything you did this festive season that wasn't really necessary? Maybe you over-catered, or maybe you gave in to temptation a little too often when shopping? Think about aspects of your spending that you could improve on for next year and take corrective action so that next year's post-Christmas wash-up is a happier time for you and your finances!
Start a savings account or join a Christmas club in January to put a bit of money aside during the year for your celebrations and holidays at the end of the year.
If your circumstances can accommodate it, think about taking on some extra work, either right through the year, or for the last few months of the year, to help you build a financial buffer to ease the pressure come the Festive Season and New Year.
