Your end-of-year plan

Your end-of-year plan

Your end-of-year plan

Retailers have laid their plans to separate you from your hard-earned cash. Do you have a plan to make sure they don’t?

The Christmas decorations are up already and even if you don’t celebrate Christmas you will undoubtedly get caught up in the festive spirit. It is a wonderful time of year to celebrate, ease off on work and spend time with the family. It is also the time of year when we overindulge – both physically and financially.

Most people are still struggling under the debt burden despite relatively low interest rates and a dramatic cut-back in credit extension. As a nation, our debt levels remain the highest in history. Most families are determined to get their finances back on track. Don’t allow this festive season to derail those plans!

Festive season survival plan

Here is a defence strategy for managing your spending this festive season:

  1. The long-term goal: Remind yourself of your longer-term financial plan: what you need to save each month and what debt repayments you need to make to achieve your financial goals.
  2. The daily budget: Now look at your budget – what additional funds are you prepared to set aside for the festive season? What percentage of your 13th cheque will go to debt repayment and how much to celebrating? Your longer-term plan will help you set those boundaries.
  3. The family meeting: Sit down with your family and discuss your plans for the holiday season. Put a big white board in your kitchen and write the amount you have available to spend. Discuss how the family wants to spend it – gifts, entertainment, holidays, etc. This will make it real and help you to stick to your budget on a daily basis. Write down every day what you have spent and what you have left.
  4. The social contract: Make a social contract with your extended family on gifts and entertainment. Everyone is in a similar situation, so be honest. Rather than buying gifts for everyone, pool your resources and buy one gift for each family member. Remember one small gift that has a special meaning is worth a lot more than how much you spent on it.
  5. The shopping strategy: When you hit the shops, go with a list and just enough cash to buy what’s on the list. Lock the store and credit cards away. Also, eat a good meal at home so you are not tempted to spend money on take-aways or extra food at the supermarket. Studies also show that we make better financial decisions when we are not hungry.

How to avoid the retailers’ marketing ploys

When you go shopping, be aware of what retailers do to get you to overspend:

  • Sales: Beware of promotions or sales that draw you into a store you never planned on entering. Usually there are never sales items in your size but it leads you to make other purchases or buy something you don’t need because “it’s a bargain”.
  • Buy now, pay later: Beware of big in-store promotions for store cards. New debt is not part of your long-term financial plan! You don’t want to be paying for the gift months after the memory of giving has faded.
  • Sweet aisles at the tills: The curse of any parent’s life, and the graveyard of many diets. Eat before you shop and, if possible, leave the kids at home. If you do have your children with you, at least pretend that you have control of the sweet situation. Tell your children upfront that they can have a treat if they behave. That way it seems like you made the choice.

(Revised by M van Deventer)