Real estate markets across the country are moving at a rapid pace as this year draws to a close. A new Finder survey revealed average Aussies are planning on spending $893 this Christmas, at a cumulative national cost of $17.3 billion. At an average of $391 per person, gifts top the list of festive expenses, while we’re also planning on spending $352 on travel- this could be higher with more interstate borders opening.
While this intention to spend is undoubtedly music to the ears of retailers, it’s critical that those saving for a first home loan don’t let the Christmas cheer derail their property goals.
In most cases, people live within their means or save in anticipation of any additional expenses. But often these sensible savers tend to have a home or a mortgage already. Generally, the obligation of keeping a roof over their family’s heads is central to this responsibility. On the flip side, people seeking to get into the market may not have the motivation to look more critically at their spending habits, especially during the fun and frivolity of the Christmas season.
Keep credit card spending under control
If you are applying for a home loan, it is critical you keep credit card spending under control. In fact, any unsecured debt such as credit cards and other extended payment arrangements such as a personal loan held at close to the borrower’s spending limits is an indication of poor financial habits, or at worse the borrower is in financial stress.
Some experts reckon using a debit card attached to a savings account rather than credit can help minimise excess spending. However, usually if it looks like a duck, quacks like a duck, then it’s a duck. My view is that whether it’s of the credit or debit variety, using a plastic card detaches a consumer from the fact they are spending money. It might seem a bit old school in this age of buy now, pay later, but the physical process of putting money in your wallet and having less of the folding stuff as you spend it, helps you better keep track of the impact of your spending Moreover, I’d only use debit cards as a worst-case scenario - and then only if you keep limited funds in the associated savings or transaction account. Moreover, these funds should be based on the amount you have budgeted to spend.
Look, if you don’t have a Christmas budget, you will run a greater chance of ending up with a ‘Christmas hangover’ in January when your credit card statements begin to arrive. All the new year resolutions about savings plans, paying off loans, or buying a new home will be shot to pieces because you have loaded up the credit cards over Christmas. Excess debt makes for a tough start to the year, while waning financial motivation could impact your longer-term property plans.
Avoid panic shopping
Shopping around and not leaving the Christmas shopping to the last panicked minutes is another way to keep your finances in check. Write a list of people you want to buy gifts for and stick to it. Then start searching the net to check prices before you go shopping to make sure you are still getting a good deal, or alternatively, the retailer may price match the competition. Impulse buys are the enemy of good budgeting. However, if you enjoy Christmas shopping and go over budget a little, just make some adjustments to your spending somewhere else.
At the end of the day, budgeting isn’t exactly up there with surfing, skydiving or hot air ballooning as a bucket list activity. However, approaching Christmas shopping without a budget is like jumping from a plane without a parachute – it won’t end well.
That is why associating a budget with financial success can make the exercise more palatable – and by setting savings goals be sure to celebrate the achievements. This way, you will find the motivation to take control of your finances this Christmas with a budget and stay on course to your property dreams.