Reining in holiday spending
Oran Hall Personal Financial Adviser
The holidays are on our doorsteps, and although spending in the holiday season has not been as strong in recent years as it has been in the past, it is the season when many overshoot their budgets and derail their financial plans.
With early planning and discipline, this need not be the case.
For some, the December pay packet will be bigger than usual due to the paying of bonuses. Others will increase their income by doing extras such as baking and part-time or overtime work where such is available.
Yet, there is no guarantee that there will not be a hole in the budget at the end of the day and grief in the New Year.
Let us see how we can avoid such a situation from developing. If you have not yet drafted a watertight plan detailing income and expenditure to match the planned activities, late as it is, today is a good time to start. Indeed, such a plan should have been made at the time you were drafting your 2014 budget and such a budget should have been tightly managed to keep it relevant.
Careful with gifts
Be careful with how you spend on gifts. Keep to the amount you have budgeted, higher prices notwithstanding, unless you have found an additional income source to compensate for these price increases.
Good gifts do not have to be very expensive. Of importance should be their worth to the recipient. They should be useful.
Entertainment can be a real monster if not controlled. Plan early and well. If you must entertain, resist the temptation to impress; so keep spending within your means. Join with those close to you to host events as one means to limit spending.
It is not far-fetched to see that some persons will likely be on your guest list and the lists of others with whom you can partner. Consider alternating hosting events with those in your circle if possible.
So family is coming and you want to show your best. Be truthful. Avoid lavish displays to impress. Most will not be fooled anyway. Focus on what they love and appreciate rather than on the elaborate. If you create enough quality time, there should be less need to inflate spending to give them a good time.
Much - too much - money is spent on food this time of year. Pay very close attention to this item of expense. Nothing is wrong with wanting to have the best, but there is no need to over-reach your budget to have what is perceived to be good.
In fact, much of the food which consumes scarce financial resources has little nutritional value and over time compromises health. Watch this expense carefully. If you keep on good terms with family and neighbours, there can be much to receive and much to exchange.
If you must decorate, consider using material used in the past if it is in good condition. If you are convinced that you must buy new items, seek out reasonable sources but also consider how you can apply your own resourcefulness to enhance the beauty of your place to keep costs down.
The level of satisfaction you can achieve by doing a good job can do much for your own self-esteem and open opportunities for additional sources of income you never dreamed of.
Can you really afford to travel? If you cannot, then do not. If you must, you could consider doing so less frequently and when you do, if you must, control your purse strings.
Determine how much you can afford to spend and spend just that. There are alternatives to overseas travel too - to other parts of Jamaica, for example. Do you realise that foreigners often know this country better than many Jamaicans?
It is critical to manage utilities well. Control the use of the telephone, electricity and water. Be more alert than at other times of the year. Choose a member of your household to keep a tight lid on their use.
Realistic shopping list
When shopping, look for good bargains. In fact, start early when bargains are real and good. Make a realistic shopping list and resist the temptation to buy on impulse. If you must avoid persons who may make it less difficult for you to control spending, find a good reason to be absent from their company until it is safe to do so.
Why should you want to borrow now? If you planned for the season and determined that you would keep spending within your means, you would have no need to borrow, thus encroaching on future income.
Let the younger members of the family be a part of the planning, spending and evaluation of the holiday activities. It should be a great learning experience for them which will equip them to manage their own affairs this time of year and throughout the year when they grow up.
Oran A. Hall, a member of the Caribbean Financial Planning Association and principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and email@example.com