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How to curb your holiday spending

Holidays are around the corner, and as expected, you will travel and buy gifts. But they are expensive, and it is expected to become more costly due to multiple factors. The pandemic impacted every sector connected to vacation - flights, hotels, restaurants, shops, etc. As a result, consumers are expected to spend more than 20% this Christmas. While there is no need to cut costs significantly, you may want to curb some spending to ensure that you can financially catch up post-break.

Here are some ways to navigate around holiday expenses:

1. Start early

It might seem like common sense; however, not everyone prepares for holiday expenses. Early saving eliminates a lot of the stress that comes with spending and reimbursement after it. On average, it takes six months to save up for vacation. If you start saving small, at least a year early, you will be able to fulfil the obligations that come with festivities without sacrificing your quality time. If you do not know how much you need for this year's holiday, look at your last year's expenses and calculate the amount you need to set aside every month to reach that goal. Observe where all the money was spent and allocate the money accordingly.

2. Be prepared

However, do not expect to stick to your budget strictly. Life is unpredictable, and situations may arise that may prevent you from sticking to your budget. Such could be medical expenses, maintenance costs, or you may be fired from your job, which has manifested into reality during this pandemic. It is very important to be prepared for unexpected circumstances. Although unpredictable incidents are subject to individuals, there are some basic measures you can take to be prepared:

  • Set aside emergency funds to back you up when conditions become urgent. This money should be liquid and accessible at all times, and it should not be used to cover holiday expenses
  • Check if your insurances cover your travel, your health and your items. Insurances will help you reduce the biggest costs significantly
  • Get help if you need it. There is nothing wrong with asking for help, especially if you have family members who care for you. They can chip in and share the costs of the festivities to give you the much-needed space to restart

3. Avoid debts

It may be tempting to use your credit cards to pay for some of the costs. But note that they are not necessary items that you need to spend for. Credit cards should only be the last resort for an emergency, not to be used for vacation-related expenses. Therefore, acquiring debt for holidays will result in far more serious repercussions that you might not recover from. If you have the cash to pay for it, better to pay without incurring interests.

If you do not have available cash and must get the item, check for low-interest instalment payment opportunities. Instalments can be a financial lifesaver, especially if you make a big purchase (like electronics). Although undertaking instalments is still undertaking debt, credit card interest rates are much higher than the interest offered under instalments. Interest rates for instalments are fixed and have a specific schedule to pay, allowing you to easily get the debt under control. They may also offer tax benefits, depending on what you are buying.

4. Shop savvy

Nothing is stopping you from shopping if you have the means. You can still cut down by sticking to some basic disciplines:

  • You can stick to cash if you are more likely to overspend using cards. Granted, this cannot be applied to every purchase (e.g. flights), but you can use cash when you are spending behind restaurants and shopping
  • Take advantage of sales and deals that will save you a lot of money. With the holidays coming, many shops, restaurants, and flights offer cheaper prices to maximise your vacation and savings
  • Shop online. No, this is not a joke. Shopping online can cut both costs and time. People do not consider the time and money it takes to shop in person because they do not see the money going away physically. Online shopping is much cheaper, and you may even be lucky to get free shipping
  • Buy early. Most businesses start offering deals months before the actual festivity. Buy some gifts early to cut down on stress and avoid shortages

Holidays are stressful. It brings multiple things into one place, which can be overwhelming for many people. Finances, family dynamics and post-festive recuperation can cause anxiety. But it need not be so daunting. Preparation is the key to a stress-free vacation. Having a plan that incorporates your well-being is the best way to ensure that everyone will have a good time.

Last update: 02/12/2021

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Disclaimer: Some text on this website is purely for marketing communication. Nothing published by Quanloop constitutes an investment recommendation, nor should any data or content published by Quanloop be relied upon for any investment activities. Quanloop strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decision.