An Accountants Guide
Holidays creep up on us so quickly. First we are saving for birthdays, then wedding season, now its summer and before we know it Holiday season has arrived! AHHH
You might feel like you should have started saving months ago for the holidays but don’t stress! Second Look has come up with a list of tips to fast-track your chrissie budget.
1 . Start saving NOW
No matter how far away Christmas is, it is always a good rule to start saving as soon as you can
One of the easiest budget plans to follow is the 20/30/50 rule. If you haven’t heard of this rule, it is very simple to understand. Split your salary into these groups:
- 20% savings: Money that goes straight into a savings account or trust
- 30% spending: A weekly allowance on leisure spending e.g dinner with friends, new shirt etc
- 50% Living: necessary spending like Rent, bills, groceries, fuel
So, for example you are paid $820/week. That would be $410 to living, $246 to Spending and $164 to Savings
2. Saving in December
Nobody is perfect, not everyone will be super organised for December spending, so here are some tricks for that last minute budget crunch.
- Switch up the 20/30/50 rule: I just taught you about the 20/30/50 rule but for holiday season try switching savings and spendings around or if your in a real crunch try 15% spend, 35% save, 50% live
- Start doing the math: If you already know what kind of gifts and other spendings you are going to make in December, add that sum together then divide it by the weeks you have until you need to spend, this gives you an idea of how much you need to put away each week.
- (This last trick is more just advice) AVOID USING AFTER PAY! Its very tempting to make your purchases through a buy now, pay later service BUT these apps can promote impulse buying and make it a lot easier to drift from your original budget. It is a lot better to have savings that you can use without spending money you don’t have.
3. Set up a Christmas Club or a Children’s Saving Account.
A Christmas club account or children savings account is a great way to save up for the holiday spendings.
These accounts are separate to your savings account and are only for saving for the holidays.
Here are some of the features that you can find from different Christmas club accounts.
- Automatic deposits from your everyday account
- Restricting access to withdrawals to only between Oct – Dec
- Interest on your savings
Most Australian banks have some form of Christmas club or Children savers account which you can set up online or over the phone. Have a look at your bank of choice and see if they offer this service.
4. Compare your spending to the average
The average Aussie is expected to spend $1,232 this Christmas on presents, food, alcohol, eating out and travel. Have a look at this graph on where this money goes.
While this may not seem like a great deal. It is quite easy to forget those additional dollars spent on things, you might not necessarily consider holiday spending. Think about clothes bought for events like your offices holiday party or the Ubers you take back and forth from family homes and functions.
Another thing about holiday season is that it normally lines up with other things. Wedding season, Melbourne cup, the list goes on.
It all starts to add up very quickly, so its important to keep that in mind.
5. Set a budget for the holiday season
Having a goal for your holiday spending’s is a very efficient way to stay on top of your spending.
Speak to a financial advisor about incorporating holiday savings into your yearly plan.
The accountants at Second Look offer financial advice and planning.
If you are planning on using your holiday funds for a trip we recommend separating them into a different savings account, this helps keep your exact budget in constant view.
Ways to save during present giving:
There are a lot of different ways friends and families organize gift giving to save money. Here are some of my favorites.
Secret Santa: Buying a gift for one person will always make life a little easier. It also means you can spend more time making the gift more meaningful rather than spending hundreds on mediocre gifts. Typically everyone will buy for one other person. you can choose to keep it a secret or reveal when the gift is drawn.
Secondhand Santa: This is a personal favorite of mine as you don’t have to spend any money. Typically, you want to find a gift of something in your house that you no longer need or want but someone else might find useful. Then you put these items in a pile and draw names till they are gone. You can also ‘steal’ gifts from others if you want it to be a little more interesting.
Nasty Santa: You have probably heard of this one before as it is known for its maliciousness. Everyone puts in a gift and names are drawn out of a hat. When picked you can choose a new gift or a gift from someone who has already picked. Somehow this always either ends with laughter or tears.
What to take away:
In conclusion There are a few things to remember:
Holidays can be budgeted. Organising smaller gift exchanges might seem less fun but it really is the thought that counts when if comes to giving.
Having an action plan for the holiday season will make things a lot more stress free when December finally comes around, and the sooner you start, the better.
Speak to a financial planner anytime of the year on how to start saving for your future. If Christmas is a really important part of your life, Work that into your annual plan.
Want to speak to a financial planner about your Christmas budget? Contact the accountants at Second Look for a plan now.
