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How do you finance the Festive Season?

12 December 2012

If you gave either of the above answers, you would agree now is exactly the time to start planning how to finance the 2013 Festive Season.

The earlier you plan, the cheaper the options, and the more options and opportunities you have available. An early start provides greater venue choice for parties, better deals, gift options, holidays and possible activities for you and your family to do, to name just a few of the extra costs that accompany the silly season. Knowing your budget and where you are at in your plan also means you’re able to take advantage of opportunities as they arise.

Having a strategy saves money and time, and reduces unnecessary stress on you and your finances.

Leaving it to the last minute usually means paying premium rates for everything and because only the most expensive and often completely inappropriate options are left, you’re guaranteed another unpleasant experience.

Consider this party scenario: 24 people for Champagne on Christmas Day at home.

1 x 750ml bottle serves 6 people comfortably with a drink each. If 24 guests are to have 4 drinks each, taking into consideration RBTs and responsible service of alcohol, then you’ll need 16 bottles. Knowing how many bottles you need means you can look for specials and buy in bulk, plan ahead and you get the opportunity to explore what’s available from wine clubs, online suppliers, auction houses.

Simple drinks and canapés can get way out of hand: making canapés, any chef will tell you, is time consuming, requires vast amounts of bench space to prepare and then plate the canapés up and even more fridge space for canapé storage. Unless you really know what you’re doing, get a caterer or stick to nuts, olives, etc. Even making turkey sandwiches can stress you out at this time of year.

It appears, from an informal focus group of men and women at the ‘water cooler’, most people finance the Festive Season using their credit card(s). (It is very important to think about the terms and conditions of your card(s) to determine if it even makes sense to use them to help you in your festive season preparations.)

The more financially astute among us will have included all or some of the following strategies: use debit cards, have a budget in mind, set priorities around what you will and won’t do.

Setting priorities around the season, includes thinking about things such as:

- how many and to what level are you planning to attend or hold parties (for example, will it require buying new outfits, providing food or alcohol, travel, etc);

- what gift buying is on the cards;

- what holiday costs are involved in the time period;

- what activities have you planned for yourself and/or the family,

- and, if you are a business owner, at what stage, if any, does it make sense to shut the business, for how long and how completely (for example: is skeleton staffing over a longer period of time a better option, etc.)

Allocating a budget in line with your established priorities and setting the level you can afford to spend on each item is one strategy.

If you’re disciplined around paying off credit cards and know you can do it either immediately or within one or two statements, using your credit card is an easy, simple option. (Missed credit card payments or only making the minimum monthly payment could mean you are still paying off the last Festive Season when the next one rolls around.)

If your season is looking big, a personal loan at a lower annual percentage rate, paid back in set installments over a longer period of time might be an option to consider.