Christmas is around the corner already.
For us Filipinos, it is the most festive season of the year, where gift-giving and gatherings abound. With these, come expenses and of course, money. Yet, this season should not just be about money going out. As it transitions into the new year, it also provides a very special opportunity to review and reassess things. Here are five financially smart Christmas moves to make this season not just festive, but fruitful for you and your family:
Communicate. Christmas is a time for family; and for families, communication is key. During Christmas season, take advantage of the busy-ness to sit down and talk about your family’s financial goals: are there goals you want to add to your existing ones for the year? Were there changes in circumstances that would necessitate these, or would it require scratching off some goals altogether?
If you are single, it may be best to think on your goals as well: a kind of introspection. With what has happened for the year, where would you want to be in the next year and the years to come?
Communication helps open the doors of possibilities and avenues of further cooperation among family members and strengthen their bond further.
Budget. Christmas spending should also be budgeted as well. A simple Christmas gift list is not so simple at all, most especially when you have listed all the people you would need to give gifts to, and then allocating an amount for each of them. The total could be at least P10,000 and if you do not have a system for budgeting, it can go overboard.
Start by having a spreadsheet for this. List on the first column all the persons you would want to give gifts to: parents, in-laws, siblings, significant other, neighbors, colleagues, godchildren, etc. Then, allocate for each one a budget. One good thing about spreadsheets is that it has an auto-sum function that lets you quickly determine how much you would be spending. If you feel the total amount is quite expensive, then do some adjustments on each person—as these are made, so does the sum—and then you can see in real time if it is within your budget already.
Set Financial Safety Nets. Christmas is also a time for bonuses! If you still haven’t established your emergency fund fully, then it is a time to do so. Having that Christmas bonus will give you now the resources to jumpstart it or complete it already. Three to six months’s worth of expenses is typically recommended as a size for emergency funds to ensure the continuity of same lifestyle. Of course, placing all of it in a bank account will yield very low rates of return; money market funds then is an ideal instrument of a portion of emergency funds as it is liquid and can earn as much as 5x more than the usual bank interest rate. You can have a ladderized approach to emergency fund planning then: 1 months’ worth of your expenses in a bank account and the rest in a money market fund to maximize the returns but remain liquid and conservative.
Invest. If you already have an Emergency Fund, well and good! You can now set aside a portion of your bonus for your future financial goals. It could be for your retirement, your dream business’ capital, or even your child’s tuition fee for next year. Whatever they are, your Christmas bonus is not just for Christmas expenses, but for your—and your family’s—future as well.
Review. As we go through the hustle and bustle of the season, we might forget that it is not only the end of the year, but a transition towards a new one: new hope, new dreams, new aspirations…or even new goals. Make use of the holidays to look back and see if you have been faithful to the budgets that you have set—why, or why not? Have you been closer to your financial goals this year, or have you been set back? If so, what are the adjustments that you must make to get back on track? Would these be adjustments in your lifestyle, expenses, or the goal itself? Are there new and emergent goals that need to be incorporated in your current plan, or are there goals that need to be adjusted or discarded altogether? This holiday season is also time to reflect and reforge your finances for the years to come.
About the Author
Rienzie Biolena, RFP, CWA, AIF, CFC is the AVP and one of the Senior Relationship Managers of First Metro Asset. He can assist you in managing institutional, retirement funds, and is active in giving practical literacy workshops and seminars for teachers. He can be reached through firstname.lastname@example.org 891-2860 loc. 101 or 0920-951-9521.