How often do you plan on not over spending at Christmas but end up dramatically overspending simply because the money is in your account? I believe that we often have strategies for so many things in our lives, such as career, family and other parts of life but very often, not our finances, which in turn affects both career and family.
Christmas shopping is one of those things that if you do it well, it could set you up for the rest of the year so that you don’t have to “chase your tail” trying to make the money you spent over December, to play catch up the following year.
7 tips to limit overspending this Christmas:
- Work on a budget
Set a budget for your total spend and then allocate individual amounts for each person. Make sure the amounts you have allocated are realistic and will allow you to purchase the gift you have in mind.
- Track budget and spending
A good method is using an Excel spreadsheet, but on the off chance that you don’t have sufficient knowledge in using Excel, a good old fashion hand drawn graph with names and numbers will do.
- Plan your spending limits
Select the person and allocate them a gift, then research the best price for the item and factor in the secondary cost if any. These costs will range from Exchange rate differences, delivery or shipping costs and if there are there any membership fees.
- Don’t forget ‘other’ Christmas spending
It’s not just how much you will spend on presents, you need to factor in your budget for the whole of Christmas. Once you’ve worked out how much you have to spend in total, you can allocate it to these different items.
- Avoid Credit Cards like the plague
Don’t forget you are spending money you don’t have and that you have not been able to save over the year. So what makes you think that you can pay it off before Christmas 2017? And don’t forget you have to possibly include interest. BUT, if you absolutely need to get one, work out who is charging the least amount of interest and plan to pay it back with a fixed payment month by month. Consider a direct debit from your pay so it takes out the “I’ve changed my mind” element. You could also cancel the card after Christmas so when you start paying it back in 2017 you are not tempted to use the “available funds” for the new impulse buy.
- Watch out for online purchases
You can lose track of the amounts you have spent. Check the delivery times and factor in the shipping amount. It can be easy to get excited with the idea of a perceived saving, but you need to factor in everything in relation to your online purchases.
- Refer back to spending v budgeting
When you have completed all your purchases go back to your spreadsheet and compare the budgeted amount in comparison to the actual money spent. Celebrate if you have hit your budget and re-evaluate if you have blown the budget.
This is not only a good system to use during Christmas but if you can get into the rhythm now, you may be able to continue for the rest of the year and potentially reward yourself with a large purchase, or the deposit for a new house or maybe a holiday, whatever your goal may be. You are only restricted by what you dictate to yourself, so give yourself a chance.
Believe it or not Australians are maintaining management of their purse strings this Christmas, which means the Australian economy could be set to take a fall. Yes, what’s good for your bank balance is not great for the economy. Read Jingle those Retail Christmas Bells to see the positive and concerning effects of a cautious Australian population.