-Thiart van der Merwe
In this series of articles, we’re giving you the advice you need on how to set yourself up for financial freedom. Our aim is to give you practical steps each month – action points that you can take immediately. Follow these steps over the course of the series and you will be set up for financial wellness.
Our fifth article focuses on managing your finances over the holiday period.
When it comes to holidays and spending most of us are in the same boat. We have that feeling that for the next two weeks we will close our eyes, enjoy ourselves regardless of the cost and sort it out in the New Year. We don’t want to think about budgeting, reigning in our spending or any of that whilst on holiday…sound familiar?
The big problem is the dreaded overspend we are faced with in January and how to get out of it. Some of us might take months to pay off our holiday spend and live in debt for longer than needed.
Instead of explaining the financial impact of overindulgence, I am going to suggest some tips to try out over the next month. It might not be the magical wand that keeps you debt free over the holidays, but could save you a lot of money.
Set up a daily budget
Give yourself a daily allowance for discretionary spend over the holidays and stick to it. At the end of each day, tally up what you’ve spent to check if you have kept within your budget. If you have overspent on one day you will need to exercise more self-control the following day. Budgeting takes self-discipline but it’s a great tool if you can manage it. Work out your daily budget before you go on holiday.
Avoid the “I will buy it there” mentality
It may be easier to shop for toiletries and groceries once you’ve arrived at your holiday destination rather than packing everything you will need. I totally understand that it’s convenient, but it’s also a waste of money. Buying a new bottle of shampoo, shower gel, spices for the braai etc. adds up. Most of us have these things in our pantry or bathrooms. Just pack what you will need and save yourself the unnecessary spend.
Use your credit card last
No one wants their holiday spending to ambush their monthly budget. To make sure this doesn’t happen, we put all our holiday expenses on our credit cards and feel great because all looks well according to our debit card balances. But this is misleading – and we forget to keep track of our credit card spend until we receive our statement at month end.
Try to pay all your holiday expenses as and when you incur them. At least limit the credit card spend by paying mostly with your debit card. Again, this will take self-discipline but could save your bacon in January.
Avoid the triple threat of eat outs
Close to my heart but oh so expensive – going to a restaurant for all three meals of the day. For me, and I am sure for many of us, food will be the item on your statement that shocks you the most in your post-holiday recon. Even though we love the convenience of eating out, we don’t need to do it three times a day. If you are one for dining out, limit yourself to eating out once a day. Eating out may add value to your holiday but be selective about where you eat and spread out your treats over your holiday. PS: Try local hang outs, they’re generally cheaper as well.
At big family gatherings everyone needs a present. The bigger the family, the bigger the debt. There are many crafty ways to make gift-giving affordable. Pick a name out of a hat and everyone buys one present or be creative and give handmade presents. Celebrate the time together with family and enjoy the moments rather than filling your stockings with unwanted goods.
Evade the Sale
The big red banner that will pop up in most shops this festive season: SALE. It will be there before Christmas to lure you in and stay there afterwards to show you what you have missed. Ask yourself one question, “Do I really need to buy this item”? If you don’t need it there is no reason to buy it, even if it is marked down 50%.
None of us want to go on holiday and constantly think about money. We don’t want to stay home and miss out on fun activities either. Paying off your December bills in June is just as bad. By putting in place a holiday spending strategy, you will be able to enjoy your time off and avoid debt.
<Foundation Family Wealth is an Authorised Financial Services Provider>