Holiday Money Mistakes You Should Avoid
Published: November 6, 2017 | Updated: December 13, 2019 | Posted by: Carlo Miguel Castañeda | Lifestyle
The holiday season always starts early for Filipinos. You will start hearing Christmas songs as soon as September, with a brief pause on Halloween. Christmas is a large part of the country’s culture, owing to being predominantly Christian or Catholic.
The start of the holiday season also marks several other things. Traffic gets worse because malls are open longer, and there are sales almost every week. Shopping becomes a near-weekly part of life as people try to keep up with the presents they feel they need to give to friends and family.
As spending ramps up, you might find yourself in debt by the end of the season. In spite of being careful with your paycheck and bonuses, there is just something about the holidays that makes you more prone to money mistakes. Here are some examples.
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Racking up a huge credit card bill
Credit card deals and promos are more expansive during the holidays. One such massive consumer outpouring is Black Friday in the US, which marks the beginning of holiday shopping throughout the country.
It has also been adapted throughout the world to mark the start of larger shopping crowds, longer mall hours, and near-unbearable traffic jams.
Credit card debt escalates during the holidays for several reasons. One reason is that you can take advantage of points and pay via installments. Because you are chasing deals and discounts, you will take on more purchases than you normally do. This includes items that were not on your list to begin with, all because there happened to be a deal on it from your credit card.
By the time your next bill comes in, you will be surprised by how much you spent, and the time it will take to pay it all back. You will be better off chasing after one deal in particular, like rebates on grocery spends.
Ignoring your budget
Face it, holidays make tracking expenses more difficult than it usually is. Your budget must weather the purchase of presents for the family, spending on Noche Buena and Media Noche, along with paying for gas or accommodation in the case of out-of-town trips.
You justify that it’s a holiday, and you normally do not spend as much otherwise. A survey in 2016 by Manulife indicated that four in ten Filipinos have debt that does not come from a mortgage.
Some of that stems from living expenses, but also comes from a lack of planning for big-ticket occasions. There is no need to be miserly when it comes to holiday expenses. But for the sake of your budget and savings, it becomes important to plan every expense.
For example, have a hard limit when it comes to the price of presents. Nothing above Php 1,000 unless a person is a very close friend or family member. Instead of giving out cash to nieces, nephews, or godchildren, gift cards are an acceptable present.
You can also offset the cost of family dinners by making parties potluck, or gather the entire family’s cooks in one room and sit down to plan the meals to the last centavo. It is efficient, and at least each side of the family can contribute something.
Spending it all
Your 13th month pay and other bonuses are meant to be spent over the holidays, right? Wrong. These massive amounts can factor into your holiday budget, but it is unwise to use it all over the course of the last two weeks of the year.
The justification of spending it all in one place is often “I worked hard all year for it,” and it’s true. But dropping it all on a single big-ticket item is also unwise. You can use a portion of the money you receive to start your emergency fund or increase your savings.
Another decision you can make is to use this money to pay off any debts you may have, allowing you to start 2018 with a clean, debt-free slate.
It’s not the holiday spending that’s bad, it’s the overspending. The holiday spirit is hardly about the presents and the parties, but being with family and enjoying the time together.
It is not about being able to show off to family members, as the “pakitang gilas” attitude sometimes warrants. It is never about one-upping people you might not particularly like by showing off Instagram-worthy parties. That is the easy path to debt and starting off your New Year with zero savings.
There are ways to ensure that you avoid being broke after the very happy holiday celebrations. Plan your budget, involve family members, and spend responsibly.