Don't let over-spending spoil Christmas. Photo / 123RF
Don't let over-spending spoil Christmas. Photo / 123RF
The holidays can be very tough on your finances. The bonus is that you have time on your hands to invest in sorting the mess out.
Certain aspects of your finances come into sharp relief over the holidays thanks to the pressure to spend. Using some of your spare timeto get on top of them will pay dividends. That might mean a new perspective on some of these aspects of your money:
Christmas and your cards
Covid-19 has had a big impact on spending this year. According to Paymark, however, our Christmas spending is following a fairly typical pattern for December and is expected to peak on Wednesday, December 23, or Thursday 24. From where I sit, the correlation between this year and previous years a bit of a shame for individuals because it does mean the same financial hangover in January. That spending does of course help local New Zealand businesses, but don't use this as justification to spend what you shouldn't. Scammers have had a boom year in 2020, so do be very wary of security and those "too good to be true" offers that usually indicate a scam.
Sadly, not everyone can afford Christmas and credit gets a hammering. Sure, borrowing can help smooth over lumpy spending. If you have to borrow, make the most of your credit card's interest-free days. Afterpay enables you to buy on credit at no cost. If you know, however, that you'll end up paying more thanks to buying on credit it's time for a radical rethink.
'Tis the season for divorce, sadly
Divorce is something no one wants to think of. The stresses of the holiday season often lead to relationship breakdowns. If it happens, you've got a whole learning curve in front of you. Without wanting to jinx your relationship, it is smart to have a worst-case scenario plan. What's more, it's essential even in the best of times to follow your finances, so if the worst happens, you know what money and or debt you have. In my humble opinion, stay-at-home parents do need to keep skills current, or even learn new ones through volunteering or study. It's not just divorce. Your partner could die or become incapacitated.
Christmas is a good time to teach your children some financial literacy. Photo / 123RF
Christmas and your children's financial literacy
Giving children everything they want is a good way to lead them down the slippery slope of consumerism, which could well result in financial insecurity in adulthood. Going without can be good for children. On the other hand, your children will sure as hell know who gets an iPhone 12 or PlayStation 5 for Christmas. My way around this is to provide money towards the item in question and require that the children pay for some of it themselves so they learn the value of working and saving. As a bonus, the item in question won't "accidentally" break conveniently just when the next upgrade comes along. This is also the time to sit down with children and explain how you budget for holidays and all of the things you need to buy during the year including their Christmas presents, providing, of course, they're past the age of believing that Santa comes down the chimney.
Christmas and the stock market
Covid has been a real bonus for platforms offering stock market investing this year, including Sharesies, InvestNow, Hatch and others. Young people in particular have embraced share purchasing. Sharesies annual Colmar Brunton poll found that despite the curved balls thrown by the pandemic, 17 per cent of Kiwis who aren't Sharesies investors and more than half (53 per cent) of Sharesies investors indicated they're investing more since Covid-19 hit. If the holidays give you the chance to learn more about investing, start buying shares or funds and review your KiwiSaver - you will benefit in the long run.
A good way reflect on your finances as the year comes to a close and to become more financially fit is to set yourself annual money management tasks for each of the 12 days of Christmas.
