Christmas is just around the corner - time to get financially savvy!

Christmas may still be a good few weeks away, but if like most of us, you measure time not by days or weeks but by paydays, then a mild panic might start to set in when you realise there are probably only a few more before the big day.

This is when most people reach for the temporary comfort of a credit card, but before you do that, try to remember the last time your credit card was completely debt-free. Not so easy is it? So many of us rack up credit card debt and then try to repay it by making the minimum payment every month. However, paying the minimum on your credit card means you would repay it completely in 18 years. That’s nearly two decades of paying almost 20% interest on your debt!

Money matters are nothing that a little forward planning can’t fix. Here are a few tips to help you survive the financial onslaught of Christmas...

Figure out your budget and stick to it
The reason most people struggle from payday to payday is because they don’t have a budget and don’t understand how much they can afford to spend based on their income.

In a budget, you need to identify three things:
1. Monthly bills (phone, power, rent…)
It’s a great idea to set up a separate bills account that you can transfer this amount into as soon as you get paid - as sadly this amount is never really going to change!
2. Annual fixed expenses (car registration, WOF, birthday and Christmas presents)
When you have a total figure, work out how much you need to set aside each payday to make sure it’s covered.
3. Discretionary spending
This is mostly the fun stuff like going out, work lunches, Friday night drinks, but also
less exciting things like petrol and groceries.

Now that you have a better understanding of your budget, it becomes easier to know how much you can spend. One way to make it easier is to withdraw your weekly discretionary spending money as cash. By avoiding Eftpos, it becomes easier to track how much you’ve spent and how much you have left until next week.

Party less for a month
We know how much fun drinking and eating out can be, but it also tends to be where most of our money is spent. Add it up on your bank statement - you’ll be shocked! If you want to have enough money for Christmas, you might want to avoid going out a lot until then, which would save you stacks of money. Look on the bright side - when Christmas arrives, there will be plenty of opportunities to party, and most of the time, it won’t cost you a thing.

Plan ahead for your Christmas shopping
By doing your budget, you should have decided how much you want to spend in total on pressies. Before you hit the shops, write a list of everyone you need to buy for. Work out how much you want to spend on each person, and make sure the total is not more than what your budget allows. Decide what you will buy each person on the list before you head out.

Knowing what you’ll buy everyone before you hit the shops has two advantages. Firstly, because you’re not deciding on the fly while out shopping, you’re less likely to get carried away and overspend on spur of the moment purchases. Secondly, if the Christmas crowds drive you insane, by having a list you just need to go into the shop, grab what you need, and be straight out - avoiding the masses with their screaming kids.

Hannah McQueen

For more information on Hannah McQueen and her financial management company visit www.enableme.co.nz.