In December, all the shops become more attractive, with more and more beautiful decorations. Everything around seems to urge you to buy. But how do we stick to a reasonable budget for meals, outings and gifts? Financial education trainer Adrian Asoltanie comes with several recommendations.
PHOTO The truth
Rule number 1: a reasonable budget
Adrian Asoltanie's first recommendation when it comes to smart spending is to set a budget.
“During the Holiday season, it is precisely the budget that helps us remain balanced shoppers. Because the budget creates this link between possibilities and wants (usually Holidays are about wants rather than needs). And then let's make a budget for gifts starting from a list of people we have in mind, what we would like to buy for each and, of course, the financial availability.” emphasizes the Financial Education trainer.
He also says he has noticed a trend in spending around Christmas and New Year's.
“In terms of what is the maximum percentage of income that we can allocate for Holiday shopping, usually, what I have observed as an average, obviously it is not valid for everyone, the month of December costs us about 50% more than a regular month. If a family, for example, has monthly expenses of 10,000 lei, they should expect for the month of December additional expenses (with meals, gifts, outings, departures, interior decorations, Christmas tree) of 4,000 – 5,000 lei”.
Rule number 2: temperance during the year
If we were frugal during the year, we can afford to be more generous during the Holidays, says Asoltanie:
“In my opinion, what you do in the rest of the year matters more than what you do in two weeks at the end of the year. It's like when a person decides to go on a diet by going on an all-inclusive vacation and that's when the dieting and abstinence takes over. That would be kind of frustrating, wouldn't it? Especially since it might be the most expensive diet that person is on. And then, I recommend, first of all, that we have a little restraint during the year, in the rest of the months, so that we have some resources for December”.
It also proposes a special fund created for the Holidays:
“What I do and I recommend to everyone is to make a separate account or envelope, in which every month they set aside for these expenses that are sure to come upon us. I even created an exercise called the “Contingency Calendar”. It's free and can be downloaded from my website. There, a person/family can put in the expenses they know for sure they will have, such as birthdays, Christmas, New Year's, Easter, weddings, baptisms and other events like that that are sure to cost a lot of money. Next to each event we will put an amount of money and basically calculate that amount, which we divide by 12 months and we get the money we should be putting aside each month for these expenses.”
The financial education trainer says that we should categorically not turn to other savings.
“Don't confuse this fund for foreseeable events with the emergency fund (between 1,000 and 2,000 lei cash in the house) that we should all have for small household malfunctions or small medical problems. Or with the safety fund, i.e. with the three days of expenses, money we should have for more serious problems, such as job loss, an expensive operation or other truly unexpected events,” emphasizes Adrian Asoltanie.
Adrian Asoltanie, financial education trainer
Rule number 3: we don't go into debt for expensive gifts
The third rule that is good to keep in mind refers to credits. Asoltanie points out that we should stay away from them during the Holidays, even if they are tempting.
“One rule we shouldn't break is not to get into debt for the Holidays for overpriced gifts, which we normally can't afford and we put them in 12 or 24 installments. What we are actually doing is creating some future obligations for some purchases that we could have prepared earlier. Especially in this economic context, I would warmly recommend avoiding debt, i.e. the purchase made on credit”says the financial education trainer.
Other rules that may be useful
Other rules that can be useful concern the division of the budget according to the expenses that we will have during the Christmas period.
- Events / activities (fairs, outings, concerts)
It is also useful that, before we buy, we look for alternatives and make price comparisons. A product that costs a certain amount in one store may be twice as cheap in another. Also during the Holidays, shopping centers have offers and promotions, which they usually announce a few days before. Some of the money spent may return to the buyer in the form of coupons.
If the budget for gifts is limited, things made at home or by hand are a very good option. And it shows the recipient that we have invested time and passion to make them happy.
