Love it or hate it, Christmas is coming and the annual spending frenzy is about to start.
Before you rush out to buy all your fantastic gifts, wrapping paper and the 16 rolls of tape you need … stop!
For many people the cost of Christmas can spiral out of control, and these costs go unnoticed until the credit card or other bills arrive in January.
There are some simple things you can do and some things to watch out for in order to make it through the festive season financially intact.
Or at least no worse off than you were before.
1. Plan — Your plan doesn’t have to be complicated. It’s having one that’s important. Maybe you only have to think about buying presents or perhaps family will be visiting and you will have extra food to buy.
Don’t forget to think about those larger than usual utility bills. You’ll be keeping everyone warm and comfortable and then taking care of all that the laundry when they leave. If you are travelling to visit family, then your fuel bill might be larger than usual. For the party animal, consider the costs of a night out with friends. Save money on hotels or taxi fares by taking turns being the designated driver.
2. Budget — Know your spending limit and prepare a simple budget. Make a list of all the things you are going to buy. Where does your money come from? Are you spending money that you have saved or do you plan to use an overdraft, credit card or store credit? You may need to set a spending cap or a borrowing cap, or a combination of the two. If you are planning to fund Christmas with credit and store cards, make sure you know exactly when the bills will be due, how much you expect them to be and how much you will be able to pay.
3. Stick to your budget — This is the really hard part.
To make it easier always take a shopping list with you. Start with all the things you really need, before buying the things you want.
If you’re a parent, then you are probably used to having your budget challenged by your children. Involve them in the Christmas budget process and encourage them to have their own. A great way to start this is to set a gift price limit or a spending limit per person you are buying gifts for.
4. Revise your budget — What if something unexpected comes up?
The car breaks down or just as you are planning how to roast your 40-pound turkey, the oven stops working.
Take time to add in these extra costs. Perhaps you had to use a credit card or borrow money to have them repaired or replaced, so make sure you now include this with your expected bills for 2012.
Be confident that you can deal with these extra costs, or go back to your budget and look for other ways to save money.
Perhaps the family will have to wait a while for the new gaming console, but it’s better than finding yourself in a post-Christmas financial hole.
Watch out for “buy now, pay later” deals.
They can be a good option, but you need to be sure that you can pay them in full when they are due. If you miss it and roll over into the finance deal, you will end up paying a lot more.
Bank charges can mount up fast so try not to go over your free transaction limit.
If you going to five stores in one day, work out how much you need and take out the cash from your bank (to avoid ATM fees).
Finally, it’s never a good idea to use credit, if your plan is to only make the minimum payments. Set fixed amounts and pay off your debt as quickly as possible.
Now off you go and enjoy your stress-free spending spree!
Please visit http://www.caribooliteracy.com for more tips on saving this Christmas!