How to avoid the Christmas spending binge

Are you still struggling with last year’s holiday debt? It’s scary how quickly we can max out a credit card and how this can set you back, sometimes for as long as one-to two years. The effects of consistent reckless spending can keep you in bondage for w

With the festive season nearly upon us, we will be exposed to more conversations filling the air, louder laughter and carol jingles whenever you go into a mall. And it is with this excitement that it can be hard to abstain from the festive fever, especially when money is involved – and more specifically if you receive a bonus, as the temptation to spend is high.

Have you asked yourself what your plans are to make this December different? How are you going to avoid the usual Christmas spending binge this time? Liberty’s Head of Customer Operations – Retention, and Financial Adviser Boitumelo Mothoagae provides some answers:

Prioritise your money – Remember, your bills will continue even after the festive season. To avoid putting yourself in a situation where you have spent your money on unnecessary items, prior to paying your essential bills such as insurance policies, investments, school fees, stationary, school clothes etc. ensure you either put away the money needed as soon as you receive it or pay the necessary bills as soon as possible. This way you will quickly understand how much ‘fun’ money you have with the comfort of knowing your day-to-day bills are covered for.

To cut or not to cut –Develop an entertainment budget to help you understand how much money you have to spend on the ‘fun’ things. This will go a long way to assist you on deciding if you need to cut things out and where you need to cut. Your budget should have a set amount of what you can spend on a night out and try stick to it. Do not cancel your investments for short term gain as you will lose out in the long-run. For example, after working out your budget, you realise you do not have enough money to go out one night each week whilst you are on leave during the festive season. But you know that the amount of money that you need to go out that extra night is being paid into an investment. Do not cancel your investment so that you can afford the extra party night. Remember, you need to save enough money each month over a period of time to see the benefit.

Credit and accounts - Keep purchases on your credit cards and accounts to a minimum. Remember, whatever money you spend now on credit you will need to pay back in 30 days’ time. Which means you will need to pay it back in the New Year and it may not disappear as quickly as you had thought. Also, remember that if you do not pay your debt off in time, stores and banks will charge interest, for example if you owe R100 and don’t pay the amount owing in time the institution will charge you interest which could be up to 30%. This means if you borrowed R100 and don’t pay it back, you will now owe R130 and this amount will keep growing unless you make the payments required.

Share the money love - If you have family staying over during the festive season or coming for a family lunch, ask people to contribute towards their stay. For example, if you are hosting a big lunch ask one family to bring a salad, you can ask another family member to bring soft drinks etc. This way, the cost of hosting your family and friends will not fall squarely on your shoulders and your pocket but is rather a shared expense, which means less for you to pay.

Remember, bad spending mistakes can be avoided. The trick to avoid festive splurging prior to your break is to plan what you will be doing. This way you will be able to budget for your activities and save towards them.

By following the above financial tips and avoiding the urge to splurge you can lighten your financial load come January and make sure that the festive feeling lasts a bit longer.