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Dec 16, 2013

Avoiding Christmas Overspending

The traditional Simbang Gabi has started.  You have probably gotten your 13th month pay and bonuses already, and feel just a little bit richer with all those extra cash.  If you are a typical Filipino your first instinct when awash in cash will be to think of how to spend all that money.   That’s fine.  You deserve to enjoy that hard earned cash.  But you should be smart in spending your money because it is so easy to overspend during the holidays.  If you go overboard in spending in the next couple of weeks you will be welcoming the New Year with a severe case of financial hangover that can linger for a long, long time.   Here are several ways to spend wisely this Christmas.

Create a Holiday Spending Plan

You will not be able to keep your spending in check if you don’t have a budget for celebrating Christmas.  Plan all of your holiday expenses to avoid buying on impulse which is one of the main reasons why people overspend.   To create your spending plan, decide first how much of your bonus you will spend this Christmas.  Ideally, you should save at least 20% and spend the rest.  Make a list of all the things you plan to do during the holidays (parties, vacation, etc.) and what you intend to buy, and then set a limit for each item. 

Monitor your spending so you can avoid going beyond your budget.  Each time you spend, record it and continuously check if you are still within the limit.  Resist buying anything that is not on your list even if you think it’s a good bargain because you probably don’t need it.  Take note that each unplanned spending will reduce the amount available for the items on your list.  You may include in your budget an amount for miscellaneous items which can cover some of these unplanned expenses.

Charge Expenses Wisely

Using your credit card to pay for your expenses is a safe and convenient way to shop and celebrate this Christmas.  Bringing loads of cash to crowded malls and shopping centers is not really advisable.  You can easily lose your money to pickpockets and thieves who are also very active during the holiday season.  However, exercise caution when charging expenses to your credit card because you can quickly rack up huge amounts of debt and you could end up spending more than your Christmas bonus.  Credit cards give the illusion that you have more money to spend than what you actually have.

Record all your credit card purchases and treat your credit card like cash.  If you can’t afford to pay for something in cash, then don’t charge it to your credit card.  Each time you purchase through your card immediately set aside the equivalent amount in cash and do not spend this money.  Doing so will help you avoid overspending and you will have money available to pay in full your credit card bill when it falls due next month. 

Be Smart and Practical in Gift-Giving

You will spend a significant amount of your bonus on Christmas gifts, so it pays to be smart and practical in giving presents.  Prepare a Christmas gifts list.  Review carefully and remove unnecessary names from the list.  Do not feel obligated to buy a person a present if your budget is really tight.  There’s no rule that says you have to give gifts on Christmas.   A warm and sincere greeting will be as meaningful as any material gift.  Huwag magbigay kung napipilitan ka lang.

Include in your gifts list the kind of present you will give each person and set a reasonable amount for each item.   Don’t try to impress the receiver by giving expensive gifts.  You really cannot buy more love or friendship with expensive gifts.  Besides, a gift doesn’t have to cost so much to be valuable and useful.  So look for simple, unique and inexpensive presents.  Something that holds special meaning to the person you’re giving it to.  For instance, a distant lolo and lola will absolutely love a framed picture of your family which shows their adorable “apos.”  Or you can send them a video message with a song and dance number by the apos.

Save on gifts by making your own presents.  It’s usually cheaper, unique, a lot more special and personal, and the recipient will greatly appreciate your effort for taking time to do it.  Examples of gifts you can make on your own are baked goodies, salads, basket of fruits, bracelets, name tags and photo collages.  You can also consider recycling gifts (presents you got in the past but did not use).  Huwag mo lang ibigay sa nagbigay sa ‘yo.  Or you can give a book.  It’s one present that the receiver can open over and over again.

In the true spirit of Christmas you might want to consider giving gifts that will benefit the victims of recent natural disasters.  Instead of giving presents directly to your friends and relatives, donate cash or goods in their behalf to organizations involved in relief operations.  You can then send a greeting card informing them of the donation you made in their name.  It’s a real win-win situation.

Save on Food and Drinks

What’s Christmas without the eating and drinking?  Food and drinks for parties, Noche Buena, and Media Noche make up a good chunk of your holiday expenses.  You can save a lot during get-togethers if you do it at home and ask everyone to bring their share of food and drinks.  Cost-wise, this beats partying in expensive venues, catering or buying party food packages from restaurants. Not to mention that home-cooked food is more delicious.  Don’t foot the bill for the whole occasion. People will enjoy the party more knowing that they’ve contributed something to the affair.

For Christmas and New Year’s Eve parties, you can agree with your neighbors to have just one big party instead of each family having their own.  Encourage everyone to bring some food and drinks to the party.  Makakatipid na ang bawat pamilya, mas masaya pa.

Don’t go to every party you are invited to especially if it is KKB or “kanya-kanyang bayad.”  It’s not only your expenses that will increase but your midsection as well, from too much eating and drinking.  Choose wisely which parties you will go to.  Of course, the best parties to go to, money-wise, are those that are free.

Christmas is a time of sharing, giving, and spending.  We simply cannot avoid spending during the Christmas season.  But you don’t have to spend a lot just to enjoy the holidays.  Would you really be willing to go all out with your spending now only to suffer financially afterwards?  I don’t think so.  Your memories of Christmas won’t be so merry when you’re left with a huge hole in your pocket after the holidays.  So be smart.  Spend wisely this Yuletide season.

Alvin T. Tabañag is a personal money management coach and registered financial planner.  He is a member of the US-based Registered Financial Planners Institute, the Financial Planning Association (USA) and the Association of Registered Financial Planners of the Philippines.  

He is also a member of the Professional Speakers Association of the Philippines.  He is the founder of Pinoy Smart Savers Learning Center, an internationally-recognized organization and “Best Provider” of employee financial education in the Philippines.  Mr. Tabañag’s center is at the forefront of a campaign to promote a culture of saving and responsible money management among Filipinos. 


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