08 Dec 2010

Control The Spend-Aholic This Christmas

Money Management No Comments

Helen Grange (Guest Writer) @ Lucid Living

Christmas is upon us and with it, the impulse to spend. But remember that the economic crunch is still with us, and the fact is that by Christmas, around 200,000 South Africans are expected to be under debt review. So even if it is Christmas, you’ll have to practice discipline over that leaky pocket. The real question is, what is it about Christmas that makes us so reckless with our hard-earned money?

According to psychologist Debbie Bright, maxing out your credit card is like any compulsive behavior, whether it be eating, sex or drinking. The festive season – which comes with social pressure to give generously as well as splurge on holidays and entertainment – makes compulsive spending harder to resist. “We become compulsive when we switch off the rational parts of our minds, and escape into a frenzy of activity without being conscious of what that activity will mean in the long term. It is meeting an emotional need in a dysfunctional way, instead of being an enjoyable and exciting pastime,” says Bright. “In this short-term whirlwind, we tell ourselves ‘I deserve it’, ‘I’ve worked so hard’ or ‘It’s Christmas, and I don’t want to miss out’.”

The trick to taming the spendaholic in you, says Bright, is to “stay in the moment”, and plan ahead. “It’s really important that you know how much you can afford to spend, and don’t go over those limits. Deciding in advance what you’re going to buy and how much you’re spending will keep you from going overboard.”

Most importantly, realize that honest communication is the way to handle the pressure from members of your family to buy them presents.

Personal finance writer and speaker Iona Minton offers some excellent tips on how to go about this:

Get your mind in the right place:  If you know you are in deep water financially, put on the brakes. Sit the family down and explain that everyone will need to readjust their sights in order to get things back on track.

Identify the costs: List all your extra expenses for December and January. This exercise alone will help you want to draw in the reins. Once you know your funds are limited, you will be more careful about how you spend.

Stop guilt spending: If you budget R500 for presents and there are 30 people on your list, the money isn’t going to go far. Buy gifts only for people who mean something to you.  A card with kind words is often all that is required to spread Christmas cheer. Explain to family if you can’t afford to buy them presents this year. Chances are they’re in the same boat.

Start early (or late!): Start buying presents early, as having time to choose the right gift helps you stick to a budget. Or leave it to the last minute, as in the last few days many stores put everything on sale to get rid of Christmas stock.

Get extended family involved: If there are 20 kids in the family circle you could agree on a set amount for each child. Instead of getting a cheap present from each member of the family, they get two or three high quality presents from the family as a group.

Realise real Christmas value: You owe it to your family to become financially secure, so saving money if you need to will be the greatest gift you can give them. Worrying about debt is not the way to celebrate the New Year.

Helen Grange (Guest Writer) @ Lucid Living

Christmas is upon us and with it, the impulse to spend. But remember that the economic crunch is still with us, and the fact is that by Christmas, around 200,000 South Africans are expected to be under debt review. So even if it is Christmas, you’ll have to practice discipline over that leaky pocket. The real question is, what is it about Christmas that makes us so reckless with our hard-earned money?

According to psychologist Debbie Bright, maxing out your credit card is like any compulsive behavior, whether it be eating, sex or drinking. The festive season – which comes with social pressure to give generously as well as splurge on holidays and entertainment – makes compulsive spending harder to resist. “We become compulsive when we switch off the rational parts of our minds, and escape into a frenzy of activity without being conscious of what that activity will mean in the long term. It is meeting an emotional need in a dysfunctional way, instead of being an enjoyable and exciting pastime,” says Bright. “In this short-term whirlwind, we tell ourselves ‘I deserve it’, ‘I’ve worked so hard’ or ‘It’s Christmas, and I don’t want to miss out’.”

The trick to taming the spendaholic in you, says Bright, is to “stay in the moment”, and plan ahead. “It’s really important that you know how much you can afford to spend, and don’t go over those limits. Deciding in advance what you’re going to buy and how much you’re spending will keep you from going overboard.”

Most importantly, realize that honest communication is the way to handle the pressure from members of your family to buy them presents.

Personal finance writer and speaker Iona Minton offers some excellent tips on how to go about this:

• Get your mind in the right place:  If you know you are in deep water financially, put on the brakes. Sit the family down and explain that everyone will need to readjust their sights in order to get things back on track.

• Identify the costs: List all your extra expenses for December and January. This exercise alone will help you want to draw in the reins. Once you know your funds are limited, you will be more careful about how you spend.

• Stop guilt spending: If you budget R500 for presents and there are 30 people on your list, the money isn’t going to go far. Buy gifts only for people who mean something to you.  A card with kind words is often all that is required to spread Christmas cheer. Explain to family if you can’t afford to buy them presents this year. Chances are they’re in the same boat.

• Start early (or late!): Start buying presents early, as having time to choose the right gift helps you stick to a budget. Or leave it to the last minute, as in the last few days many stores put everything on sale to get rid of Christmas stock.

• Get extended family involved: If there are 20 kids in the family circle you could agree on a set amount for each child. Instead of getting a cheap present from each member of the family, they get two or three high quality presents from the family as a group.

Realise real Christmas value: You owe it to your family to become financially secure, so saving money if you need to will be the greatest gift you can give them. Worrying about debt is not the way to celebrate the New Year.

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