Money shocks that could blow up your Christmas and holiday budget
Costs that come out of left field can damage not just December’s finances but the new year too. Watch out for these money shocks.
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Christmas comes every year but still has the ability to surprise us through gifts, kindness and often in some not-so-nice ways.
Overspending, paying hidden charges, or being slapped with a big bill in mid-December can create a financial hangover that lasts well into the new year, and money specialists say it is wise to understand where those nasty surprises can strike.
They say there are ways to handle holiday season financial shocks and emerge from them in stronger shape.
MyBudget director Tammy Barton says a happy Christmas is an affordable one, and people should be “as detailed and realistic as possible” when building a budget to understand where their money is going and where savings can be made.
“Be sure not to prioritise Christmas presents over household bills,” she says.
“Having all of your bills and expenses laid out in a budget will allow you to see what is affordable this year.
“Even though Christmas is at the same time each and every year, it can still deliver some financial surprises that you may not have planned for.
HIDDEN COSTS
“Quite often it’s the unexpected bill like your gas or electricity that falls in the middle of December at a time when we’re already feeling the financial pinch of having to fork out more for Christmas.”
Barton says surprises can include:
• Hidden service, transaction or shipping fees on Christmas or holiday purchases.
• Extra costs for shipping goods bought online to get them in time for Christmas.
• Impulse purchases and overspending on gifts or decorations that were not planned.
• Travel expenses caused by issues such as flight delays, accommodation changes or rental car issues.
Financial advice firm Findex’s head of client – wealth, Jonathan Scholes, says budgeting for presents and other spending is vital.
“Blowing out the credit card at a time when interest rates are high, and perhaps your mortgage payments have doubled, may lead to the ability to not pay back the credit card at the end of January and hence lead to very high interest being paid,” he says.
People can be surprised by their overspending over the Christmas and New Year Period when “the temptation is often to live like a king or Queen”, Scholes says.
FAMILY FINANCE
“When you add this expense on to the cost of Christmas, things can quickly blow out and put you on the back foot before the year starts,” he says.
“Plan to spend a day on you and your family’s finances – contact your bank, your electricity company, gas, phone, anywhere you spend money monthly, and look for a better deal. Ask your existing provider. In my experience you will save some money which you can use for something fun.”
Scholes says people can ease some financial pressure by reviewing their credit card point and frequent flyer point situation to see if points could potentially be used for gifts or other holiday spending.
“A good way of saving for the Christmas period is to use a credit card that has points attached to it, let them build up during the year and utilise this for Christmas presents,” he says.
Money coach Karen Eley says December’s “financial frenzy” can be worsened by extra unexpected spending on groceries, gifts and holidays, but it can managed to some extent by shopping smart, looking for sales and discounts and planning your spending early.
“Limit eating out where you can,” she says. “See if catch-ups can be done in a cost-effective way – coffee rather than dinner, or a bring-a-plate gathering rather than an expensive restaurant.
“We often pay a convenience tax for leaving things to the last minute or being time poor.”
Eley says consumers should check their emotions and have honest conversations with family and friends if things are really tight.
“You’re not alone, and maybe they would also like to ease the financial pressure this Christmas,” she says.
SURPRISE! BEWARE OF THESE PRESSURE POINTS
• Temptation to spend more on impulse purchases
• Hidden transaction and shipping costs
• Children's’ Christmas lists more expensive than expected
• Unplanned travel expenses
• Bills arriving at a bad time
• Food cost blowouts
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