16 December 2022

Avoiding the financial hangover this Christmas

Image supporting article - Avoiding the financial hangover this Christmas.

FMA’s Manager of Investor Capability Tammy Peyper shares her tips for a special Christmas season that doesn’t break the bank.   

The festive season is always stressful but this year in particular it seems many of us are feeling the pinch. 

Food and petrol prices are rising. Mortgage interest rates are rising. The only thing that’s not rising is my bank balance.   

If you’re anything like me you’ll be looking at all the Christmas trees and seeing nothing but flashing dollar symbols! 

So this year I've jotted down some ways to have a special Christmas without breaking the bank, and a January without the financial hangover. 

Tip 1:  Create a spending plan  

There are heaps of useful tips online to help you manage expenses year-round. I use the Sorted budgeting tool as I find it easy. I also have a budget app on my phone which I update as I spend. 

When it comes to Christmas, I always create a spending plan. I do it every year and do it early.  

At the top of it is how much I have to spend, and underneath it all of the expenses: gifts and names, party costs, extra travel expenses. If it doesn’t balance, I slash costs. If it does, I put it into action.  

The alternative is blundering my way through December and then suffering during January – a fate I have experienced before! 

Tip 2:  Be honest with others  

I recently came clean with friends that my husband and I couldn’t go out to dinner with them simply because it wasn’t in our budget.  

I explained that we're saving for when our fixed mortgage rate expires, to help cushion the blow of what will be an almost doubling of the interest rate we’re on now.  

Turns out our friends were in same boat! Cue tangible relief and a joint pot-luck dinner night at ours!  

Being honest had several benefits. It managed others' expectations, gave us a budgetary break, and created space for others to do the same. 

So if you can’t afford all the trimmings this year, say so and do it soon. I suspect your loved ones will be grateful they can save a little money too. 

Tip 3:  Get real about splurging  

My family have set a gift limit of $30 per person.  Everyone has agreed to it so no-one will feel like they’re spending more than others. (And if they really want to, then that’s their prerogative!)  

By having a fixed limit, you can manage the budget and also create a little challenge: What can you find that has meaning or value to that person but doesn’t cost a bomb? 

I plan to buy a few small things for each person, within that $30 limit, just so there’s more fun in the unwrapping. 

Another of my favourites is looking in op-shops, which not only have cool stuff for great prices, but your money is going to support a good cause too.   

And when it comes to meals, I tell everyone to bring a plate. I love to host Christmas Eve, so we create a menu and share it with our guests. Everyone can bring something on it that suits their own tastes (gluten-free, vegan, keto, etc, etc) and any leftovers are boxed up and taken home. 

Added bonus: I don’t spend a stressful Christmas Eve in the kitchen! 

Tip 4: Start saving for next year 

This is a big one for me! Next year, regardless of the economic situation, the festive season will come around again. So why not start getting ready for it as soon as possible?  

Putting aside as little as $5 a week will give you around $250 by this time next year. Stretch that out to $20 a week and you’ll have $1000.  

I’m not necessarily talking about cash in a cookie jar either. Buying presents throughout the year – at sales or just whenever you see a bargain – helps take the rush out of Christmas too. 

Even better, this can really help avoid a budgetary black hole in January. 

Tip 5:  Be kind and gracious to yourself 

After the last few years of the pandemic, we need to be looking after ourselves more than ever. 

Christmas can be a hectic time after what may have felt like a very long year. So this is a time to treat yourself with kindness. 

Me? I plan to be low key, spend time walking in nature and eating an extra mince pie. 

I’m going to log off social media so I can avoid feeling like everyone else has got a bigger and better Christmas tree, turkey and/or gift haul. 

And I’ll be spending time with friends and whānau, and enjoying life in the analogue world.     

Christmas is a time of giving, but that includes giving to yourself; and one of the greatest gifts of all is peace of mind. 

So I hope you’ll get some of that too, and I wish you and yours a very happy festive season.