1. Identify What’s Motivating
Your Silly Season Spending
The good (or bad) thing about the festive season is that it happens at the same time every year – and that means we know it’s coming and we can plan ahead. Being finance chicks, we love a good budget, but before we dive into that, the best place to start when trying to achieve a debt-free festive season is by Unpacking Your Money Story.
We all have truths that we tell ourselves, beliefs and assumptions that dictate our actions or influence our decisions. The same goes for our money. While having a money story isn’t a ‘bad’ thing (thank goodness because we’ve all got them), knowing what yours is and how it translates into spending decisions at this time of year is really helpful in reorienting your mindset. A few questions to reflect on:
- What were the conversations about money and Christmas that I picked up as a kid?
- What are some of the ways that the media and social media portray Christmas giving that could have influenced me?
- How do I see debt and what’s ‘worth’ going into the red for?
- What role does money play in the way I show people I care about them?
- How would a Christmas without the bells and whistles make me feel?
These are great questions to ask yourself before you start creating a budget for the festive season. With a deeper understanding of truly what money means to you and how you show people you care about them, it will become much easier to set parameters for a successful budget.
2. Create a Vision Of What a Debt-Free Christmas Could Bring You
Many of us harbour a mixed bag of feelings, anxiousness; stress; generosity; love, when it comes to the festive season. It is for this very reason that we recommend you give some thought to what version of a debt free Christmas is right for you. Debt is not always monetary, emotional debt is a thing too! Combining these two debts is an almost guaranteed way to rain on your own parade. We have all fallen victim to the trap of purchasing expensive presents because of the expectations others place on us, or maybe that we place on ourselves. If a debt-free Christmas means filling your stockings with friends and family rather than gifts, that’s okay. Sometimes all we need is a little music, and good company.
Being ethical about our spending choices during this time can often help us find more meaning, especially when it comes to giving gifts. Ethical in this case refers to what we are purchasing, as well as treating our bank account with respect. We don’t mean to sound like anyone’s mum here, but often the most meaningful/impactful gifts are thoughtful ones. We suggest the following. Think about how you want to feel towards the end of the year when it is all said and done, work backwards from there. Create your debt-free Christmas in that image. Big ticket items will often crumble under the weight of thoughtfulness. Even better if your gifts are responsibly sourced.
4. How to Sleigh Your Christmas Budget, As Your Presents is Required!
Unlike a “regular” budget, your Christmas budget is likely going to be short-lived, and as each year goes by, you’ll get better and better at it. Make a list (and check it twice) of all the things you need to spend on at this time of year such as gifts, food and drink, travel or accommodation, outfits.
Figure out how much of your cash-flow can be diverted to your Christmas budget without spending beyond your means. Before you even think about it, credit cards and BNPL are not the answer! Not only do the retailers lose out on revenue because of fees, but you’ll be left paying it off for months. Budgeting is the answer!
Here we have a simplified example. Starting with your cashflow, categorise your spending into simple macro elements (Bills, Savings, Play, Emergency). This will help you understand where your money is going. Now simply figure out if there is surplus anywhere, if there is we plug it back into savings and we are done… Don’t worry we are just kidding.
Now back to the real world, what if the surplus isn’t obvious or maybe there isn’t any surplus? Which category could use a diet? This is a subjective process that you may not get 100% correct the first time and that’s okay. At this point we create a fifth category (Bills, Savings, Play, Emergency, End of Year). Now we must play hard ball, which entire category (or parts of a category) are non-essential for the short-term? This is where our Christmas fund will be coming from. We move that cash into our End of Year category, and we are well on our way to a debt-free Christmas.
5. It’s the Most Wine-Derful Time of the Year, Don’t Forget to Reflect
We promise that’s the last pun, but the point stands. It’s easy to get caught up in the busyness and chaos that the silly season brings. It’s an equally useful as it is wholesome activity to take some time to reflect on your end of year, particularly when it comes to your spending. Ask questions like; Was my budgeting accurate? Did I spend what I thought I would, if so was it more or less? Were people happy? Was I happy?
This kind of reflection will help you plan more successfully for next year, by finding out what works and what does not. Remember, a debt-free Christmas is about much more than money.