Finance tips for the Christmas season

By Louisa Rust

With Christmas just around the corner, shoppers are being warned to spend wisely or risk financial trouble in the new year.

Financial counselling services were busier than normal at the start of the year, according to team leader for Mission Australia’s Creditworthy Wollongong, Russell Franks.

“Traditionally we’ve seen an increase in demand for our services from February onwards as credit card statements come out, there are more people seeking help,” he said.

“Credit debt wouldn’t be the sole issue. There are also rental costs, and the inability to pay utility bills.

“But underlying that is the fact that money that has been put aside, or could have been used for bills was spent on Christmas gifts.”

Mr Franks said having a Christmas budget was one of the best ways to manage money over the season.

“Like any major expense, Christmas should be budgeted,” he said. “Even if you’re going well, you never know how it will be down the track.

“Have a look at what gifts are costing you, and why you are spending that amount. Don’t get stuck into thinking you have to buy expensive presents if you can’t afford it.”

Mr Franks also urged people to start planning for Christmas 2008 now. “Some institutions offer Christmas Club accounts, which are a good idea. ”

Stockland Shellharbour Marketing Manager Michelle Clark said the Christmas period saw a big increase in the number of shoppers at the centre.

“Our traffic doubles between December and February,” she said.

The Institute of Chartered Accountants’ offers the following financial tips for the festive season:

• Set a budget you can afford and stick to it. Don’t feel pressured to spend more than this budget;

•Make a list and identify the gifts and Christmas items you will purchase. This will help keep you on track; •Be the early bird – last minute shopping creates the risk of spending more than you intended and impulse buying;

•It is important to think carefully or to talk with a professional advisor before borrowing at any time of the year – future rate and interest rate rises should be considered;

•Stick to one credit card to avoid debt increasing with multiple fees and charges;

•Try to pay off any outstanding debts and make credit card repayments before the due date to avoid late fees and increasing interest costs;

•Consider paying above the minimum repayment on a credit card to avoid extra interest charges;

•Try not to use store cards for large purchases as they generally have higher interest rates;

•Be wary of ‘buy now - pay later’ or ‘interest free’ offers. Read the small print and plan repayments.

The Institute also suggests that now is a good time to start preparing for Christmas 2008. Here are some tips to get you started for next year:

•Set up a separate bank account for Christmas 2008 and have some of your pay packet automatically credited to it each week;

•Look out for post-Christmas and mid-year sales. It’s never too early to buy presents for next Christmas;

•Update your insurance policy to reflect new assets gained over Christmas, such as televisions, stereos and whitegoods.