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Holiday budgeting – money tips for Christmas

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Joe Dobbs, a professional bond trader based in Lantau, advises on surviving the silly season with at least some of your savings still intact.

At the risk of being considered a Scrooge, my belief is that Christmas should be about giving as much as you can, not all that you have and especially not what you don’t have. Take it from me, holiday spending can quickly snowball into a financial disaster.

In our 16 years together, my wife and I have had to recover from our fair share of Xmas overspends. In the early years, we tended to put it all on credit, blithely agreeing to suffer the consequences later. There was no budget, so we were under the illusion that there were no limits – and no limits over Christmas can lead to a pretty bleak January.

For some years now, to avoid getting caught out, we’ve held a dedicated savings account, into which a monthly sum is transferred automatically. Rather like the piggy bank, my daughter Amy, 14, still swears by, it allows us to save gradually and methodically for our (festive) goals.

We have ATM and online access to the account, so we can draw directly from it. This helps ensure that the money we’ve set aside for Xmas is the money we actually spend – no juggling between accounts. Using a single, dedicated account also helps us keep an eye on the balance as the holidays progress, and track the true costs without too much effort.

It’s November already, and a bit late in the day for me to advise you on starting a 12-month savings plan – do that next year. For now, here are some practical tips that you can start implementing right now, to help avert post-holiday debt.

Christmas countdown

Before the silly season gets into full swing, work out how much you’re able and prepared to spend. The amount will depend on how much you’ve already saved, how much you can set aside from current funds, and how much you can spare in the weeks leading up to Christmas. Give yourself a little room to manoeuvre and then stick to your budget – it’s the indicator of what you can and cannot afford.

Then it helps to get specific. What are your essential Xmas buys? How much, for instance, would you like to spend on gifts, decorations and food? Create a detailed list for each ‘category’ and add it all up.

If what you want to spend and what you actually have to spend doesn’t tally (and let’s face it, it probably won’t), you need to get realistic and make some reductions.

When cutting costs, look first to your itemised gift list. Xmas is a time for giving, sure, but is there anyone on your list, who you can get away without gifting this year? Does it include people you haven’t seen for years and are no longer close to? If the answer is yes, cross them off.

Like I said, get realistic. Do you need to present everyone in your office with an expensive token, or would a well-chosen card suffice? Remember that any gifts you buy that are not covered by your budget will hit your credit card come January.

Once you have refined your list, and come up with reasonable sums that you would like to spend on each remaining person, add up all of those amounts. If the total is still more than your budget allows, go back and play with the numbers.

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Savvy spending tactics

It’s easy to get carried away when Christmas shopping, whether in the mall or supermarket, but don’t be fooled into buying things you don’t need. Stick to the lists you’ve made, and avoid impulse buys. ‘Tis the season to be jolly, but no one said anything about giving way to shopaholism.

Gifts are the biggest drain on a Xmas budget, and if you have a hard time not overspending in the malls, it’s best to wise-up to the alternatives. Donating HK$500 or so to a friend’s favourite charity is an interesting gift option, and one that’s become more and more popular in recent years.

At the very least, think carefully about where you shop. The IFC and Pacific Place malls are not your only options, and neither are the dedicated Xmas bazaars, where (trust me) you can blow your entire budget in an afternoon.

Last year, I bought all ‘my’ presents online, and it worked out very well. At a site like Amazon, you can limit your search to products that fall within your chosen price range. At this time of year, you’ll find some really good discounts, too. It’s a win-win situation – by finding some of the gifts you want for less, you end up with a little extra to spend elsewhere.
My wife chooses gifts wisely and well. As she says, thoughtfully chosen gifts are worth much more than expensive ones.

With this in mind, shopping for kids at Christmas is a piece of cake. We like to look past all the high-priced tech toys and Disney gizmos, and find something a little different. Last year, I sent my three-year-old nephew a set of bath toys and a selection of powders to colour his bath water. This little package came in at less than HK$200 and was, I am told, the best present ever.

Just as a gift’s worth is not dependent on its price tag, you can’t judge a gift by its packaging. Cutting down on superfluous Xmas wrapping – bows, bells and gift bags – is a surprisingly effective way to reduce your annual spend. I’m not suggesting you hand over your presents without wrapping them, but why not streamline the packaging? Most of it ends up being recycled, anyway.

Family hold back

Restraint begins at home, so talk to your family about the costs involved at Xmas. Reducing your holiday supermarket spend should be easy enough – cutting down on gifts can be more complicated, so sit down and make joint decisions about limits.

The costs of buying a gift for every member of the wider family can soon add up, so get on Skype and seek agreement that you’ll only spend so much per person. Deciding to give gifts only to the children will also reduce your costs considerably.

At our Christmas party this year, each family is going to bring just one present. All the frugally wrapped gifts will go into a box, or maybe a pillowcase, and we’ll play Luck Dip. I know we’ll have a good time – and save heaps of money.

This year too, instead of buying each other 101 small presents, my wife and I are getting ourselves an Apple TV. This way everyone (including Amy, of course) gets the gift that keeps on giving.

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