The Christmas season is the most wonderful time of the year, but in light of the COVID-19 pandemic, it can be stressful for people who are grappling with reduced income and yet feel that they have to spend to celebrate properly. Even though you get to save on some expenses since travel is curtailed and parties are banned, there is still the pressure to send gifts to loved ones or buy extra-special food for the holiday table. Instead of feeling love, peace, and joy this Christmas, one may end up feeling stressed, anxious, and guilty.
“Financial worries can lead to poor mental health.” says Mariel Bitanga, a financial planner and founder of SImply Finance, a boutique financial planning firm committed to empowering women. “And it can get worse during this time of the year when people end up overspending and enter January with less savings or in debt.”
To ease the anxiety and achieve financial wellness, you need to be more mindful and responsible about how you manage your money during the holiday season. Here are some suggestions:
- Start early. Ideally you should be planning and listing down all your possible holiday expenses in the months leading to December, not during December itself. This way, you have a head start in setting aside cash for it and avoid the panic that comes with scrounging for funds when D-Day comes along.
How much of your income should you allocate for spending? Mariel advises people to follow the 50-30-20 budgeting method. “It’s beginner-friendly, generous towards your wants, and makes you feel more in-control of your spending,” she explains. Under this method:
- Allocate 50% of your income to your necessities, or the things you need in order to survive, such as utilities, rent, and basic groceries.
- 30% can be used to cover your “wants.” Wants are defined as non-essential expenses — things you choose to spend your money on although you could live without them if you had to. These include clothes shopping, dining out, entertainment subscriptions (i.e. Netflix), and groceries that are not part of the essentials. Your Christmas fund can fall under this category.
- Finally, 20% can be put towards achieving your savings goals, investment opportunities, or paying back any outstanding debts.
- Make a list, check it twice, and stick to it. But even if you started late with your holiday planning, no worries, there are still ways to save. One is to make sure you approach your shopping methodically and not haphazardly. Just as your parents taught you to never go grocery shopping on an empty stomach because you’ll end up buying more food than you originally planned, neither should you do your holiday shopping without a ready list of recipients and corresponding budget. This makes you less likely to overshop and overspend.
- Great gifts don’t need to be expensive. “Scour online for cheap but useful finds,” Mariel advises. “If you are crafty, make something out of your own hands; it’s cheaper but will be more meaningful for the recipient. Lastly, promote sustainability by normalizing giving secondhand gifts, like a dress that doesn’t fit you anymore but you know will look good on your friend.”
Gifts can also be non-material. “During these tough times, a simple gesture or word of encouragement will mean the world to someone who is struggling,” assures Mariel.
- “Don’t go into debt just to impress people or make them happy,” Mariel says. This means you shouldn’t feel obliged to give gifts if you really cannot afford it. “You’re the one who will suffer if you spend beyond your means and get the credit card bill next month.” Mariel says. “If the gift giver is sincere and a real friend, they will not expect anything in return; just don’t forget to say ‘thank you.’”
- When all the spending is done, reflect on what you could have done better and set your goals for NEXT YEAR. “Financial responsibility entails a lot of self-reflection,” Mariel reminds. “When you have the time, sit down and audit your finances. Think about what you can improve on, and what your financial goals are for the following year so that you can start preparing.” A financial planner can help you outline your goals in an objective manner, help you make sense of the computations, and create recommendations and action steps to fulfill those goals. “We’re here to give advice and present a clearer picture about your financial status,” Mariel explains.
And in case you do overspend or miss out on your financial goals this Christmas season, forgive yourself. “We are going through tough times right now, so don’t be too hard on yourself,” Mariel assures. “There are always ways to change the financial plan and save more, you just have to be creative and trust the process.”
Finally, always remember to go back to what the holidays are really about. “It’s about giving thanks for your family, friends, and all the other blessings you received this year; focus on those rather than on material things,” says Mariel. “Then make a firm commitment to change your ways and do better (financially) next year.”
If you need help managing your finances, send Mariel a message on www.simplyfinanceph.com and book a free Discovery Call to know more about their services. And if you want to talk to a friend to beat the holiday blues, message MindNation at http://m.me/themindnation!
Written by Jac of MindNation