Remember February? That post-festive season and post-holiday period when - if you're like most people - you have just kitted out your children for the school year, your annual bonus is but a dim memory and your bank statement reads more like a threat.
The problem for consumers in the southern hemisphere is that the season of gift giving, summer holidays and the new school year all coincide. The northern hemisphere, by contrast, has a spread of events, with summer starting in June and the new school year in September.
So here you are again, facing the big annual spend, and probably more concerned with where you are going for a break than how much it will cost. And when you are in the middle of it, the feeling of bonhomie is likely to be more potent than your dread of the wagging finger of your bank manager.
Everywhere you go, the pressure to spend will be there. The question is, can you make this year different? Here are some tips Personal Finance has put together that may help, without spoiling the fun.
Tip 1: Control impulse spending with a budget
It sounds boring, but budgeting does help, particularly if you appoint someone in the family to be the budget policeman. Most of us have very little idea of how much we are spending. Our credit cards seem to spend more time on a swipe machine than in our wallets and visits to the ATM to draw cash are more regular than cleaning our teeth.
Sit down now and draw up a budget. At the top of the page put down the amount you have available to spend. Then start subtracting from that amount.
It is probably best to start with the annual holiday. List everything - from how much the transport will cost to get there and back, and get around at your destination; the accommodation costs; and entertainment, from the hiring of jet-skis, to bungee jumping, day trips to the local sights, movies and meals out. When you have listed everything you can think of add another 10 percent as a buffer because you have probably underestimated.
Then move on to the next big-ticket item - gifts. Draw up a list of gift recipients and what you want to spend on each one. Send out the family spies to find out what each is expecting or would like and match it to the price.
Once you have completed the list, don't forget to add a few more for that moment when a long-lost cousin drops in to surprise you with a basket of fruit and something more spirited.
Then there is the food and drink. Whether it is Eid, Hanukkah, Christmas or New Year, food is always at the centre of celebrations. Breaking bread (if it only were just bread!) with friends and relatives is the time-honoured way to celebrate special dates, whether temporal or heavenly. Plan those menus now and cost them out.
And finally all those little extras: Telephone bills go up as we phone all and sundry to wish them well (if you do not believe us, check those phone bills from last year) - and then there is the wrapping paper, people rapping on your door for Christmas boxes, bonuses for the gardener and the char and any other person to whom you feel inclined to give a bit of cheer.
By this time the figure at the top of your budget page has probably turned into a minus. Now's the time to go back and trim those figures rather than have regrets in February. Little Johnny ain't gettin' that Playstation this year. You are more likely to avoid over-spending if you have drawn up a proper budget.
Tip 2: Keep track of your spending
The problem with budgeting is that when we do sit down and budget we have every good intention of sticking to it - but we never do.
One way to ensure you stick - at least vaguely - to your budget is to have an additional column on your budget page. The extra column is for you to record what you actually spend. This helps in a number of ways, including:
- You immediately see where you are going wrong, which enables you to make adjustments before things get totally out of hand; and
- Next year you will have a more realistic base on which to draw up your holiday season budget.
By making adjustments while you spend you may well lessen that desperation for your January pay cheque.
Tip 3: Don't use your home loan
Variable debt home loans have become an easy but even more dangerous way to finance consumption spending. Most banks make these loans available as a convenience to borrowers, mainly for the purpose of financing big-ticket expenditure.
If you are using a home loan, or any debt vehicle, to finance consumption spending, you are looking for long- term problems as far down the line as a financially insecure retirement.
Remember, by using your home loan you could land up repaying three or four times the amount you have borrowed over the repayment period in interest.
If you must borrow from any source, have a plan to repay the money in at least three months.
Tip 4. Find clever, inexpensive gifts
There are some good, appreciated gifts that can mean a lot more than one of those expensive, never-to-be-used, never-appreciated gifts. It just takes a bit more creative thought.
Grandparents may appreciate receiving their grandchild's first drawing as a framed picture. A young couple with toddlers might appreciate a card entitling them to a free Saturday night of babysitting and a meal voucher at a nearby restaurant.
Another idea is to make a contribution towards the savings fund which many parents establish (or should have) to meet the ever-increasing costs of education.
Tip 5: Watch impulsive spending
Many of us are still paying off December debt well into the new year. One of the main reasons for this is that debt is just too easy nowadays. Everyone wants to lend us money or have us spend on a credit card or store card, which makes impulsive spending all that much easier.
If you are an impulsive spender, the best thing to do is to make "debt spending" as difficult as possible for yourself by leaving such things as credit and store cards at home when you head for the mall.
December is also the time when many people use every spare cent of borrowing available, particularly on their credit cards. This means using that ubiquitous, but dangerous, budget section of a credit card. It is amazing that, come December, every shop assistant, even food retailers, are so used to people using the budget section of their cards that they always ask "straight or budget", like it is a new flavoured drink.
The budget section of your card should quite simply never be used. You will pay exorbitantly high (close to or on the Usury Act's top rate) while you are repaying this debt.
The mentality of "borrowing big and making the minimum repayment" is a dangerous game.
Tip 6: Take advantage of new year sales
Ever thought of delaying gift giving until the January sales? How about giving a picture of the gift and a nominal gift with the promise that the gift itself will come later in January or February?
Tip 7: Save now, spend later
Holidays are expensive - check back to Tip 1. Why not set up a holiday savings account early in the year? Not only will this give you more leeway by the end of the year, it will also give you the additional interest you will have saved on the money. This is far better than having to pay interest on borrowed money.
Tip 8: Giving is more satisfying than getting
Most people find the act of giving more satisfying than receiving. You don't have to spend big - it is the thought that goes into the gift rather than the price that counts in the end.
Tip 9: Shop early
By the time you have spotted the first "only 20 days to Christmas" warning flashing on television, you have left it too late.
Most of us set off to shop for gifts without any idea of what to get, apart from "when I see it I will know it is right". And the closer it gets to gift- giving date, the more panicky we get when the "perfect" gift has not been spotted. And as the panic increases so does the limit on what we are prepared to pay for the "perfect" gift. The Playstation for little Johnny has suddenly turned into a new computer with expensive games!
Add to this that most bonuses come with the December pay packet; as we wait for the bonus to start our spending sprees, the pressure for panic spending increases. And then of course it is amazing how prices go up in December.
Tip 10: Buy one good present
A suggestion is that all members of the family should combine their wealth to buy one wanted, good present for each other. So if little Johnny wants a Playstation, get mom, dad and sis to all contribute. This is far better than buying three unwanted gifts.