Tag Archives: christmas budgeting

Where Does Our Money Go?

Cash slips through the pockets of Americans each day, and by the end of the week memory fades. There’s no reason to think it’s any different for us Canadians. A survey found that 48% of Americans suffer from “mystery spending.” The VISA USA survey found that Americans lose track on average of $2,340 annually.

Nearly half of consumers say they can’t account for more than one-third of their cash (for the few people who still use “real” cash) spending an average of $120 in a typical week, but losing track of $45. According to the survey, 7% lose track of $100 or more each week. One in five people who admit to misplacing more than $25 in cash per week say their mystery spending is “out of control,” and 62% feel that “small cash purchases make it difficult to track spending.” Furthermore, 47% say that “mystery spending makes budgeting difficult.”

Those aged 34 and under – especially men – are the biggest mystery spenders losing track of an average of $3,078 per year. VISA obviously suggests that the cure for “mystery spending” is to put small transactions onto plastic.

The best laid plans can quickly go out the window starting this time of the year.

A study reported on our spending habits, and this one is a killer to our budget. At Christmas time half of all spending for others ends up being things we buy for ourselves. So for every $100 we average $50 bucks for ourselves! Be really aware of that, be honest with yourself, and just work your lists before you ever leave the house. That, along with a fixed amount of money per person – not the sky is the limit and NOT spending for yourself. Commit to not buying for yourself until Boxing day, or January – or better yet – not this season!

List everybody! If not on the list – it won’t be happening. If you want to take it to the full extent of the budget – write down the amount of money you’ll spend on each person – add them up then take the cash out of the bank. When you’re out of money – go home and stop spending. And don’t even think about leaving the house with your credit cards in your pocket. But it’s so cute and it’s on sale are NOT valid reasons for going over your budget.

If not, the financial hangover will last for months and months – it’s just not worth it.

Besides – gifts aren’t about the money – it’s the thought that counts. A well-thought out present that someone really values is way better than an expensive something they didn’t really want or need.

The Money’s All Spent – Now What?

Now that it’s the week after Christmas I’m reminded of an old Irish Rover Song called: Wasn’t that a party, and then talks about the hangover.

That’s kind of like our financial lives, having just spent over $22 billion on Christmas, mostly with borrowed money, and including lots of presents for ourselves. I know, I know, we work hard, it’s our money, we deserve something, it was on sale, we really needed it, etc. Well, if we were to be honest with ourselves, that’s all nonsense. Broke people can’t afford to buy stuff, and it’s almost always a “want” and not a “need.” That’s how we get to spending over $4.2 billion on impulse purchases in a year, according to one Canadian study. And, to be honest, that number is way low, because it’s the last thing we’ll admit to.

Yes, we work hard, and yes it’s our money. But do you want to keep working hard forever? Freedom 77 doesn’t have the same ring to it as that old commercial campaign of Freedom 55, does it? At some point in time, we do have to get away from the spending party and focus on paying off the hangover and saving something for someday down the road. Intellectually, we know that, but when are we actually going to get around to it is the big question that will change your entire financial life.

Right now, let’s be honest: We spend more time planning our vacation than we do our financial situation. Make 2012 the year that you’ll actually turn that around. Here are a couple of suggestions that are small enough where you’ll do it, but big enough to have a significant impact. Why small steps? Because our sub-conscious mind will revolt against huge goals that seem impossible to reach.

You’re not going to lose 60 lbs, but you can lose a pound a week. You won’t run the marathon this summer, but you can go for a 15 minute walk each day. You also won’t be debt free by February, but you can start on that journey with one step at a time.

Resolve to say no: Whether it’s to yourself when it comes to spending, to your kids, people at work, or anywhere else. It’s the one word that’ll change your financial life.

Take your credit cards out of your wallet: At least for January, leave the cards at home. If you have an emergency, you’re one call away from getting help. But going to the mall or charging this or that isn’t an emergency – honestly.

Set a cash limit: Pick an amount below which you’ll always always pay by cash or debit. The higher the limit, the better – if you make it $50, gas, small grocery purchases, lunch, etc., will all be paid cash. That alone will drastically reduce the charges on your credit card. When we use a credit card we spend 12 to 18% more – period. Whether you pay it in full or not, it’s still a ton of extra spending that isn’t helping.

Stop being financially stupid for 2012: You know exactly what that means. They are different things for all of us, but make the New Year one where you’ll stop doing the top two things that get you further in debt, or don’t grow your savings.

And finally, here’s a great post from Facebook this morning that kind of says it all: Do something today that your future self will thank you for.

Happy Boxing Day

Today, and it should probably be Boxing day, too, don’t head back to the stores for anything other than food stuff. Last minute shopping and impulse purchases are huge financial killers. Today, just say no. You’ve done enough, bought enough and are enough. One more present isn’t going to impact your Christmas, honest!

You know Christmas is coming again next year, right? That’s not going to be a surprise. Just like your car insurance and money for a vacation. There are a few annual bills that seem to always catch us by surprise. But nothing is further from the truth. We know they’re coming! So make a decision to set up a separate savings account that’s not hooked up to your ATM card. Then either do it yourself, or ask your bank or credit union, to transfer over a fixed amount of money each month. It just needs to be one-twelfth of what these annual bills add up to so you have the money when they come due.

Lastly, there’s the biggest, best and most powerful Christmas present you can give to yourself and your family. It’s the gift of financial freedom. And it all starts with two simple steps:

Firstly to make the decision to be debt free and dream ahead a little of what that’d be like to have literally no bills to pay and nobody sucking huge amounts of interest and fees out of your income.

The second step it to sit down with your partner if you’re married. One hour with no television, no kids and no interruptions. All you need is an open mind and heart and a genuine conversation. I know, most people would rather talk about the weather and sex than their finances, but few conversations are more important.

Talk about your dreams and your finances in an honest and open way. Then get a piece of paper and write down your net income each month and every dollar that’s going out right now. Each dollar has to have a label on it before it gets spent.
The 2nd part is just to list your bills and debt. Because it can only get paid with what you have left over after food, shelter, clothing and transportation.

The game plan is to pay minimum payments on everything but the smallest debt. Then the next smallest one, and so on. You’d be amazed how quickly you get traction and a huge level of confidence.

The section in the It’s Your Money book walks you through it really simply. It’s worth it. You’re worth it, and one of the best gifts you can give yourself and your family.