KEY POINTS:
It's that time of year. Santa and his little helpers are on their way to do liposuction on your bank balance.
Yet a phenomenal amount of what we give this Christmas will end up in the rubbish bin or op shop by February, or simply languish unused.
The long-term effect on your wealth of all this wasted spending can be enormous. If our December and January spending could be cut by $1000 a year, that money was invested at 8.2 per cent, the current on call rate of the Kiwibank and RaboPlus online savings account, and taxed at the 19.5 per cent rate, over 20 years the money would amount to $41,844. That's a nice present from Santa.
Big business dictates what Christmas means to us. So here are 10 tips to get off the Christmas treadmill.
1. Create a new mindset. If you're someone who loves to shop and spend, it might be time to train yourself to think differently. How many people, after all, do you know who simply can't stand the idea of more stuff in their homes? Yet we still buy them presents. The aim is to redefine how you think about Christmas and what better time to do that than Christmas. Start by reading books such as Not Buying It: My Year Without Shopping, by Judith Levine, which can be borrowed from libraries. There are also endless websites dedicated to spending less such as http://frugalliving.about.com (which has a section dedicated to Christmas) or www.stretcher.com
2. Set a spending plan. This means creating a budget and sticking to it. One way to do this is to review what you spent last year. The website Office.microsoft.com has downloadable event budgets, which work well as Christmas budget templates. There's a very simple worksheet, that can be found on About.com by searching "holiday gift spending worksheet".
3. Keep gift giving under control. Just because goods are available in the shops, doesn't mean we have to buy them. One great way to spend less this Christmas is to agree spending limits with friends and family. That way no one can be offended. Send an email well in advance explaining that you're chucking out the commercialism surrounding Christmas.
Who really needs to spend $1000 on a flash toy for their husband, wife or partner? That sort of expense should be budgeted for during the year, not given as a gift. That's just an excuse to overspend. If a child (or adult) really wants a super-expensive present, consider giving a voucher or note that offers to match what they save dollar for dollar. You could also do what the Americans do and "re-gift" last year's unwanted presents. If this sounds too cheap, then consider giving away a valuable possession to a loved one.
The Christmas stocking is another tradition that has got out of hand. Once children got an orange in their stocking if they were lucky. These days they're stuffed full of expensive gifts. Setting limits controls the stocking stuffing.
An excellent way to spend no cash at all on presents, that is growing in popularity rapidly, is to give personal gift certificates for services such as home-made meals, back massages, free babysitting and so on. The website www.buynothingchristmas.org, which was originally set up by a North American Mennonite group, has printable gift vouchers and the Microsoft Office website has 16 different printable gift certificate templates.
4. Shop online. Shopping on the internet can help avoid spur-of-the-moment purchases. Even if you're not shopping online, the internet can be used for comparing prices. If it's electronic goods you're after, then always check the prices on Pricespy.co.nz. The website Ferrit.co.nz can be useful for other purchases. Even if you're convinced that you want to buy a gift at a certain store, some will have price matching policies. Trade Me can also be a useful point of reference for prices of new goods. For that matter, buying second-hand will save money.
5. Christmas does the environment no good whatsoever. In the UK it is estimated that consumers use 8000 tonnes of wrapping paper every year, which amounts to around 50,000 trees. Christmas cards are another crime against the environment. If every New Zealand household sends 20 cards each year, that's 3.8 million cards and goodness knows how many trees. Nice cards cost up to $5 each and add to that between 50c and $2 postage each.
Wastage isn't just limited to paper. Remember, that plastic toy from China that lasts one day before being broken has used up fast disappearing petrochemicals in its manufacture and has a huge carbon footprint thanks to the distance it has travelled.
6. It's the thought that counts. Tell your friends and family that you're going to be a rebel and not a mindless consumer. Yet another silk scarf or pair of socks can make virtually anyone cringe. Give them a Sweetheart Award, which can be downloaded as a template from http://office.microsoft.com
7. Don't buy on credit or the ghost of Christmas past might come to haunt you. Getting a personal loan or extending the mortgage to pay for Christmas and holidays is a great way to make yourself poor. These loans should only be considered for planned expenses, such as home improvements and emergency-related situations.
8.'Tis the season to be jolly. Indulge in free Christmas pastimes such as a walk in the park, and be kind to others. If you live in Auckland take a walk up Franklin Rd in Freemans Bay and enjoy the Christmas light display. Or marvel at the window displays at Smith & Caughey. You could also have a Christmas movie marathon around the family TV to get in the mood.
9. Avoid store cards with stings in their tails. It's so tempting to sign up for a store card at Christmas. The inducements can be very tempting indeed. Farmers, for example, offers 55 days' free credit or a chance to win back your Christmas shop.
It sounds great, but ultimately the consumer pays for it through fees. GE Creditline Cards are another popular option, offered through companies such as Harvey Norman, Furniture Court, and Mitre10. There is an establishment fee of $35 to $90, according to the company's helpline, which can add significantly to the cost of anything you're buying. At Farmers the establishment fee is $40 for "fixed instalment", meaning hire purchase. The terms and conditions document lists all sorts of other fees, which you can get stung with unless you pay in full and on time every month. What's more if you don't pay in full, the interest compounds.
10. Re-read last year's financial resolutions. How have you done? If they were dead in the water by the end of January, then this might be the time to revisit them - just before you do start spending.
