Sticking to a budget is tricky at the best of times, let alone over the festive season. But your home loan won’t go away because it’s Christmas, and neither should your overarching 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 advanced planning. In fact, when you have an initial consultation with NZHL, your consultant may ask how much you typically spend on presents and holidays and build this into your plan with you.
Let’s look at some tips and tricks around holiday budgeting to keep things on track.
Plan & Review your Gifting Strategy!
Many Kiwis love nothing more than 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!
So, step 1 is to make a plan – yes, that should include a budget based on how many people you need to buy for, some people go as far as making a per present or person budget (a tiered approach has even been known to be applied to certain family members!)
To get you started, here’s 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 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 the gifts, they all go in the middle. Names are drawn out of the hat to select presents with the option of stealing an already opened present. 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 and focus on finding something that does.
Think outside the box
If there’s 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; 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, it’s essential to factor this spending into your overarching budget.
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?
Because lending restrictions are tightening, banks may reflect on how you spend your money today if you decide you want to extend your mortgage down the track. Lenders are now required to closely scrutinise spending habits, which means if you’re spending more than you previously said you would, or excessive use of ‘buy now pay later’ payments may have consequences later on.
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. By establishing your take-home income and average monthly expenses, DebtNav can help you create a pathway to paying off your home loan.
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 you 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.
When setting your holiday budget, it’s important to consider your current circumstances and future goals and then plan accordingly.
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.
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 for yourself how much you could be saving and what could be possible for you with NZHL.