With the festive season almost upon us, many are excitedly anticipating how they’ll spend their time over the holidays. In addition to time spent, many also think about what money they will spend. Whether it’s on a much-needed vacation, affording time off work, or placing presents under the tree, the silly season sometimes leads to stressed-out savings accounts.
At CFV Services, we’re here to help you budget in the lead-up to Christmas and provide helpful tips on getting your budget back on board to hit the new year running.

How to spend responsibly over Christmas

If you’ve got to December and are considering what impact Christmas and the new year break will have on your bank account, then you’re not alone. Market research company, Roy Morgan, estimated that Christmas 2021 cost Australians $11 billion on gifts, alone!
As most understand, though, the expenses at this time of year extend past presents. Travel costs, holiday stays, decorations, functions, events, school holiday activities, festive food, and time off work all contribute to the expense of the holiday season.
Here’s how you can keep hold of the financial reigns:

1. List your expenses

Whether in a fancy spreadsheet, a notebook on the dining room table, the whiteboard on the fridge or using our Wealth Portal (for ongoing clients — you can list this within the bank account it will come from as a to-do), list your expected expenses. Starting this process now will mean you have ample time to remember those little costs that cause the Christmas budget to creep up.

2. Set cost limits

Once you know what needs to be covered, set a cost limit for each item. For example, if you have multiple family members to buy for, set a gift limit for each family member — this will help keep the budget within your limits and provide a clearer guide on what type of gifts to buy! You can also have a less active November in terms of spending to ensure you have enough for December — get on the front foot!

3. Understand your cash flow

If you have an existing budget that you stick to, consider where the funds will come from in your current budget to put towards your total expected spend. Grabbing the calendar to check how many pay days are between now and when you need to spend can help you to schedule what’s to be bought and when.
Try to make this year the final year of last minute planning. Take this as an opportunity to see how much you spend on the Christmas period to start putting money away from Jan 2023 for Dec 2023 and make this a habit. Financial management is a deliberate and intentional process — start now.

4. Avoid going into debt

While it can be very tempting to go wild over the summer, racking up credit card or buy-now-pay-later debt can only put you behind for the new year. If you need to use credit products, setting reasonable limits for expenditure will help avoid the post-holiday budget blues.

While we want to do the best for our loved ones, gifting is about the thought and can be a
token of your appreciation for the loved one, it should not come at the expense of limiting your financial growth. This is even more important as it means your loved ones get more in the future from you.

Achieving a prosperous new year

Being able to achieve prosperity in your new year is made easier when you make a concerted effort not to start January 1 behind. Our biggest tip to set your savings up for success in the new year is to create short, medium, and long-term goals.

Don’t wait until new year’s eve before setting your financial resolutions — thinking about what you’d like to achieve in 2023 and beyond can help start the new year at full speed.

Short-Term budget goals

Typically, financial goals you can accomplish within one year are considered short-term. If you’ve never set a budget before, your first short-term goal may be creating a budget!
Other common short-term goals are:
Reducing expenses
Reducing expenses can include systematically going through your budget to determine where you can access a more cost-effective option. For example, you might not need the highest internet or NBN plan, you may be overinsured on your home and contents, and there could be bundle deals available from utility providers or entertainment subscriptions.
Top tip: regularly review all of your insurances, including your personal insurance, such as your life insurance and income protection, to ensure that you’re adequately covered and not over or underinsured. We can help with your family and asset protection needs.
Reducing debt
It’s a no-brainer that reducing your bad and good debt can reduce your stress and increase your surplus cash. A common approach is to pay down your non-deductible debt first; that is, the debt that you cannot claim a tax deduction on. The more appropriate approach to consider is getting rid of bad debt — debt that is accumulated on something that isn’t income-producing or a growth asset, such car loans, wedding loans, holiday loans etc. From here, look at your highest-interest products and prioritise paying those down first.
Have you considered: a debt consolidation or refinance on personal debt can help improve your cash flow, reduce interest payments, and get ahead quicker. Our cash flow budgeting services could help!
Starting Up and Maintaining an emergency fund
Having a fallback for when things go awry doesn’t need to be a pipe dream. Consider what realistic amount you can set aside each week, fortnight or month to put into an emergency fund to get started. Consistency is key here.
Our suggestion: don’t place 100% of your surplus income into an emergency fund, or you’ll be tempted to dip into it. Consider opening a separate account to start stashing some cash away. Financial planning professionals almost always advise against ‘permanent set and forget’ approaches. However, in the case of emergency funds, a set-and-forget approach often works best!
Medium Term goal setting
Your medium-term goals act as the bridge between your short-term goals and your long-term goals. Ideally, medium-term goals will take longer than one year to achieve but less than five years.

Often, your medium terms are driven by your long-term goals, so it’s at this point that you should understand what your financial objectives are for 5+ years.

Is your goal to reduce your home loan by a certain amount? Go on a family holiday? Buy your first home? Or even be debt free? Whatever the goal, sit down to map out the steps you need to take to get closer to the end goal.
Your long-term financial goals
It might go without saying by now that your long-term financial goals are those that you wish to achieve in 5+ years. Depending on which life stage you’re currently in, your long-term financial goals could be to purchase your own home, get married, financial freedom or retire!

Life is about enjoying it within your means and achieving your goals. As life goes on and time passes, your long term goals will become short term and can be achieved with some consistent and clear approach to getting there.

What happens if I go off track with my budget?

Life happens — even the most prudent investors cannot predict or prepare for every twist and turn along life’s journey. The most important thing to do if you find yourself drifting off the budget path is to stop, reset and start again. As time goes on, resets are less frequent, staying on track is easier and achieving your goals comes as often as Christmas celebrations 🙂

CFV Services can help meet your short, medium and long term goals

No matter where you are on your budgeting path, CFV Services can help. Whether it’s cash flow and budgeting, investment management, superannuation, pre-retirement or retirement planning, or simply understanding how to get to where you want to be, CFV Services is backed by exceptional experience and understanding when it comes to financial planning.

Learn more about how to turn your silly season into sensible spending and achieve long-term prosperity by booking a Financial Advice Goal Discovery conversation!

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