How much should you spend on Christmas?
Christmas has slowly creeped into local supermarkets, with every aisle boasting red tinsel, green garlands, and mistletoe. What started off as a rare Christmas hit in November to groom you for the festive season, has now progressed to full-blown jingle bells.
But with all the enthusiasm for a merry Christmas, where do you draw the line between spoiling yourself after a difficult year and drowning yourself in debt for the year to come? Moneybags journalist, Isabelle Coetzee, has a look at how much you should spend this Christmas.
Roz Thomas, managing director at Hill and Knowlton Strategies South Africa, explains that the best way to reduce your Christmas spending is to have a budget.
“Know exactly how much money you have available, list all your expenses – from wrapping paper to groceries to transport costs – and decide how much you can spend on each item. Start with the expenses that are fixed, like transport, and then move on to the costs you have some control over, like gifts,” says Thomas.
According to Clearpoint Credit Counselling Solutions, an American, non-profit budget and credit counselling organisation, individuals should not spend more than 1.5% of their annual household income during the Christmas holidays.
In other words, if you earn R120 000 annually then you shouldn’t spend more than R1 800 during your holidays. To help you calculate the maximum amount you should spend this festive season, have a look at this Holiday Budget Calculator.
After typing in your annual household income, the calculator will refer you to a new page where your suggested budget (1.5% of your annual incomes) will be divided into five categories, including gifts, parties, travel, food, and donations.
Do not be alarmed that your budget is referred to in Dollar terms. Since the amounts are calculated according to a percentage, users can simply pretend that the Dollar sign represents Rands. In other words, if it says your suggested budget is $1 800 then it actually means your suggested budget is R1 800.
To get the most out of this amount, Thomas makes the following suggestions:
- Think before you buy: If you’re going to buy clothes for your children this December, consider getting them items of clothing that they can wear a lot, and not just on very special occasions.
- Find the best deals: Once again, it’s a good idea to make a list of exactly what you need. Groceries are going to be expensive this month, so cut back on the luxury food items and look out for deals before you buy.
- Share costs: December is all about parties, but these can be expensive. If you’ve agreed to host a celebration, then reduce the cost by asking all your guests to bring a dish and drinks. Remember that it’s been a hard year for everyone, so your friends and family will definitely understand and be more than willing to share the load.
- Encourage saving: Rather than buying your teenager something ‘cool’ they will only use for a month or two, open a savings account for them and make a small deposit. Encourage them to put some money away every month, even if it is just R20, and save towards something they really want.
According to Kim Potgieter, director and head of Life Planning, we are bombarded with enticing 50% discount sales and the ‘buy 2 get 1 free’ offers.
“It’s so hard to resist spending a little extra on that special person, especially when faced with beautifully decorated shop windows and last-minute holiday deals,” explains Potgieter.
“Getting into debt is easy, but getting rid of it is not – it is no wonder we suffer from January blues. Apart from covering our Christmas debt, we are still faced with school fees, insurance costs, medical aids, and the list goes on and on…” she says.
When discussing end-of-year bonuses, Angela Saltas, director at Corporate Retirement Services, points out that it’s nonetheless important to spoil yourself – as long as you’re not foolish about it.
Similar to your annual bonus, your holiday budget can be used to lighten your monthly financial burden during 2018. If you’re willing to forgo the typical holiday spending and opt for a pragmatic approach to your December spoils, Saltas proposes the following:
- Pay some of your monthly expenses as an annual payment and get some relief in your monthly budget. Most insurances and subscriptions will accept an annual payment.
- Pay school fees up front for the year – even if the discount is not much! It just gives you that level of comfort knowing that you are sorted. In fact, you could pay an extra amount to cover all the additional costs throughout the year.
- Bulk buy all of those staple monthly items – like toilet paper, deodorant, and washing powder.
- Bulk buy all of the unexpected stuff – like birthday presents. Just get a whole bunch of great stuff from the January sales and save yourself the hassle of rushing to get a gift en-route to your next party. This works brilliantly if you have kids and they go to parties a weekend.
- Buy a blow-drying Contract – this is brilliant, and it is first on my Christmas wish-list because it is the gift that keeps on giving. Most hairdressers will sell you a bundle and throw in one or two blow waves for free!
- Buy a pair of running shoes – they cost less than a gym contract and you can get your Vitamin D while you get your exercise.
Jo-Anne Bailey, sales director and African manager of Franklin Templeton Investments, insists that growing your wealth is not complex – it is merely a case of understanding a few simple financial principles and being disciplined with the money you have.
“Behind the smoke and mirrors, it’s just Rands and Cents,” says Bailey.