The Xmas Nudge
- By Darren Smith
The lead into Christmas and the holiday period, whilst full of joy can have a significant impact on financial and holistic wellness. Two in five Australian workers are financially stressed (AMP 2019 Financial Wellness Report). There are many drivers of this, some of which include our lack of financial direction, our struggles to balance the family budget, the level of debt we have and the pressure of financially supporting our extended family.
Retailers have fine-tuned the nudging of us to purchase now and the positioning started many months ago. We continue to be conditioned to spend and there is no shortage of credit options available which in return only adds to the temptation.
It is a time where many of us catch up with our friends and family and recharge the batteries which has a positive impact on many elements of our wellness. However, this still has its own costs financially. In fact it is a period where there is significant pressure on the family budget. If funded by credit we won’t feel the real anguish of this spending for several months.
The funding squeeze can come via self-imposed pressure on getting gifts that impress the ones we love. It can also be a period where we over compensate for the lack of time we have spent with some loved ones in the previous 12 months. The pressure can come from wanting to impress and entertain family and friends that we have not seen as often as we may have liked. An additional pressure comes from the little voice in our head. We tell ourselves that we’ve had a really big year and worked extra hard so we should reward ourselves with a special gift such as a widescreen TV or a holiday overseas, after all we have earnt it, right?
It is a clear example of the constant tension we all face between the immediate gratification of wanting something now and waiting until we have the money on hand and paying later.
In terms of managing our finances, additional pressure comes from not doing the basics throughout the year and not having the discipline to make the hard decision and defer. Instead we bend to the emotional sway of spending now. The good news is that it is not to late to manage through this challenging period in terms of spending.
As part of the ongoing financial education workshops we deliver in workplaces, it has been evident that with a few basic principles and a little guidance people can achieve significant improvement. Whilst the below steps may sound simple, it does require focus and the ability for individuals and families to understand what is most important to them.
10 tips to improve your financial wellness during the festive period
Focus on time with family and friends not the materialistic gift itself. Our time is the most valuable gift we can give to others.
Look at group membership discounts you may be entitled. Quite often you can get up to 10% off common gift cards that are purchased for gifts. This includes groups such National Seniors and RACQ.
When spending time with family and friends focus on activities/venues where you can have fun but limit the cost. For example, take advantage of the parks and beaches that we are blessed with in Australia.
Have a set budget to limit spending during this period. You can then manage this by tracking your spending.
For the creative spirits – personalise a handmade gift. It has so much meaning when people know you have dedicated time and effort for them.
Take advantage of deals in the lead up to Christmas but ensure you are still sticking to the budget. This is particularly relevant for things that can be stored for a period of time outside of the peak period.
Pool resources between families and friends by sharing the cost that comes with family events. Work together and agree what each person’s contribution will be.
For the large families – pool resources where there are many family members in terms of gifts. For example, one gift per child rather than each family purchasing individual gifts for everyone. Secret Santa between families is a great way of doing this.
Review what you don’t use or don’t need and sell it to generate some additional cash.
Review and keep close tabs on your other spending as there may be some opportunities to save.
There are many more practical things that you can do to take control of managing your money and keeping the stress that comes with this time of year to a manageable level. For employers that are focused on wellness programs for their staff there is a fantastic opportunity for you to incorporate programs into your workplace pre and post-Christmas. If this is something you would like greater detail on then please contact Financial Advice Matters through our website or myself, Darren Smith directly via LinkedIn.