It’s the most wonderful time of the year
~ Andy Williams
It is once again that time of the year where we enjoy the festive season! With Christmas around the corner, I am guessing everyone is rushing to get presents. Many of us are also feeling the need to reward ourselves by indulging our material wants and perhaps taking lavish holidays. Do you realise though that with these festive spends, your wallet can thin out pretty quickly? While it may be inevitable to spend more during the festive season, how can we manage money more effectively and avoid over-spending?
1. Make a plan for money management with the festive spend
Based on research, up to 95% of our daily decisions are driven by impulse and subconscious decisions. Some of these decisions can have larger financial implications than others. End-of-year sales such as 11:11 and Black Friday can seem very attractive. If planned carefully, these sales could be a good way of saving a few extra dollars. However, we are often tempted in such sales to make more impulse purchases that contribute to the over-spend. It is hence important to prepare a shopping list and budget.
Although planning seems straightforward, we often miss out the most important part – leaving a buffer for impulse buys. Managing money with the festive spend can often be thrown to the wind as we get caught up in the excitement and emotions of the season. This means that after you have listed the items you plan to buy, and your budget for each item, consider adding in a buffer to cater for the impulse buys if you know you tend to exceed your budget. This helps limit your over-spend, avoiding situations where you have to dip into your savings, or go into unnecessary debt. That said, the buffer is more of a safety zone, and not an excuse to justify purchasing more items or giving in to impulse buys constantly!
2. Learning to say ‘no’
During the festive season, excitement about family gatherings, gift exchanges and self-indulgence often makes it harder for us to say no. Our mind would come up with justifications like:
We can over-spend very quickly when we don’t know how to say ‘no’ . If you find yourself saying ‘yes’ to almost everything, try doing this quick exercise of saying ‘no’ this festive season – write down the ‘why’ before making a purchase. This prompts you to consider your motivations behind the purchase. Knowing your ‘why’ helps you gain clarity around what truly ‘sparks joy’ or is done out of obligation/ a fear of missing out . This way, you have a stronger ‘yes’ to your purchases. Likewise, you will also know what you can be firm in saying ‘no’ to, in order to avoid an over-spend.
3. Set debit/credit card limits or use cash to manage money in the festive spend
Do you find yourself spending more quickly when you are swiping your card instead of using cash? I do. When we use a card, it is easy to lose sight of how much we spend. This is especially so for those with credit cards whose limits can be up to 4 times our income. As such, we can easily overspend and even get into debt. Particularly during the festive season where we tend to buy more, this can easily balloon our spending.
One way to manage this is to use cash so the visual cue of decreasing cash in your wallet can prompt you to stop spending. For those of us who still prefer cashless payments, we can request to decrease the limit on our cards or reduce the number of cards we use. This helps us to avoid snowballing credit card debts that affect our credit score and increased anxiety over our ability to repay the debts.
As with the mood of the festive season, it should be about celebrations and happiness, rather than worrying over our expenditure and having a financial hangover after the new year. These 3 tips are not just quick hacks for this festive season but also a way to start building positive financial habits for 2021. To learn more about how you can start hacking your life by building good habits, check out this article. Avoid over-spending during the festive season by trying them out now!