Sticking to a budget is tricky at the best of times, let alone over the festive season with record-high inflation driving prices up.
But your home loan (and rising interest rates) won’t go away because it’s Christmas, and neither should your financial goals.
Yes, it’s easy to lose track and overspend, especially on pressies for the kids, trips away, or fun times. But if you’re smart and ahead of the game, you can manage your pennies and still have a great time!
At NZHL, we believe the key is planning and allocation. When you have an initial consultation with NZHL, your consultant may ask how much you typically spend on presents and holidays and will help you build this into your plan.
Let’s look at some tips and tricks around holiday budgeting to keep things on track.
Plan and review your gifting strategy.
Many Kiwis love a somewhat wonky Christmas tree bursting forth with presents.
No one’s asking you to give it up, but perhaps the presents don’t need to flow across the lounge room floor.
Step 1 is to allocate a total budget based on what you can realistically afford to spend – without going into or limiting debt as much as possible. Consider how many people you need to buy for and a spend allocation per present (or person) – some even apply a tiered approach for certain family members!
To get you started, here are a couple of gifting strategies:
Secret Santa – Standard
Consider a Secret Santa with your family/friend group, where each person is responsible for one gift for a preselected person. Often these gifts are more personal and considered as they reduce the rush of trying to buy multiple presents. You can (and should) also add a value limit.
Secret Santa – with Stealing
Rather than buying for a particular person, you buy a present that fits within an agreed-upon value. Then, when the time comes to give out the gifts, they are placed together in a pile. When their name is drawn (out of a hat) each person gets to choose a present. This can be from the unopened presents or has take the option of stealing one of the already opened presents.
It’s ruthlessly good fun, and it’s always great to have your name drawn last!
Set spending limits
While it’s easy to get caught in the trap of feeling like Christmas is a competition, the reality is your friends and family don’t want you to break your budget, particularly on a gift for them!
So, setting a maximum spend limit on gifts will help set realistic expectations and ease any feelings of social pressure – remember you won’t be the only one considering their budget this Christmas!
Ignore advertising outside of your budget
Advertising goes into overdrive in the lead-up to Christmas; everyone wants to sell you something. And, while the great deals and special prices may seem tempting – if the prices don’t fit within your budget, ignore them, and focus on finding something that does.
Think outside the box
Have someone you would like to include on your gift list but don’t have quite enough in your budget?
Consider if there is another way to let them know you’re thinking of them these holidays.
Is there something small you can do – a homemade meal for those busy coming into Christmas, a batch of their favourite biscuits (also handy if they are expecting lots of visitors), or perhaps a seedling or herbs for their garden?
It’s easy to feel anxious about what you can and can’t afford to spend on gifts for loved ones – especially when finances are already strained. However, with advanced planning and budgeting, it is possible to ease some of the pressure, stick to your budget, and still be able to give great gifts.
Road trips, entertainment and general spending.
It’s not just gift-giving that can blow the budget; when you’re on holiday, you tend to socialise more with dinners and nights out and, of course, road trips.
And because many Kiwis use credit cards or Buy Now Pay Later payment methods, it’s easy to lose track of exactly what you’ve spent. While these payment methods can be helpful, this spending needs to be factored into your budget – you still have to pay it back!
Setting a manageable holiday budget in advance and keeping your spending in check is the best way to stay on track.
It’s all about foresight; consider if you overspend now – what impact will this have over the coming months and on your longer-term goals (like getting rid of that pesky home loan)?
Lending restrictions have tightened. So, spending more now than you previously said you would, or can afford to, or frequently using Buy Now Pay Later payment methods may have consequences down the track, like limiting your ability to extend your mortgage.
NZHL clients can use DebtNav to help plan for (or recover from) holiday expenses.
DebtNav is NZHL’s unique visual online tool that helps you track your progress as you work towards financial freedom.
DebtNav can also help you plan to reach new goals, such as a new car, home renos or holidays. With DebtNav, you’ll see the impact these goals and the additional spending will have on your finances, helping you make informed decisions and adapt your plans to continue working for you.
And should you find yourself in a situation where you have overspent, DebtNav will help you visualise your financial situation and determine what you need to do to get back on track.
If you aren’t an NZHL client, you can try any number of budgeting tools or simply grab a pen and paper and map out income versus proposed holiday expenses. Consider setting yourself a total budget for the period and then breaking that into categories.
Then stick to it!
That might mean shopping around ahead of time for Christmas gifts or suggesting a Secret Santa option, and it might mean one road trip instead of two. Be a creative Kiwi and think of workarounds to save money; you might even have more fun!
NZHL keeps you in control.
At NZHL, your financial freedom is our highest priority, so we’re here to help for the life of your loan.
Remember, if your circumstances have changed or you’re considering a change, you can always get in touch with your consultant and make sure your home loan structure is still working best for you.
When setting your holiday budget, it’s important to consider your current circumstances and future goals and then plan accordingly.
And, while you’re considering your budgets, if you’re considering a switch from your current home loan provider, check out our home loans calculator to see what could be possible for you with NZHL.