Business

Christmas Saving Plan

Your Money

With Cherryl Hanson-Simpson

Thursday, December 19, 2013    

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Christmastime is traditionally the season for spending, so it would be unusual for us to think about saving during this period. Even the most disciplined consumers may get a little consumption-crazy over the holidays, putting aside their reservations and really getting into the swing of shopping.

Despite the heavy emphasis on seasonal splurging, it may actually be an opportune time to turn your thoughts to saving and securing your financial future. With so much money in circulation during the holidays, why should you only be thinking of depleting your reserves at this time?

Let's face it - despite the cash that seems to be awash everywhere, how many of us really have anything enduring to show after our frenzied spending? Let's look at some of the ways in which we can focus our minds on saving so we can have a little more financially rewarding season this year.

Strategise to save for the season

Ironically, you can use the holiday shopping exercise to help you develop the willpower that is required for money success. Create a detailed list of items to purchase and promise yourself that you will stick to your budget without succumbing to the temptation to buy what you don't need.

As you pick up each item, ask yourself if it is the best use of your money, or if you would be better off saving your funds. You'll get a sense of accomplishment when you demonstrate discipline in your financial choices; resolve that you will continue this approach to spending going forward.

You can also prepare for next season's expenses by saving for your needs over the course of the year. Use your budget to determine a reasonable spending limit for the holidays and commit to saving a portion of it every month, so that next Christmas you will have enough money on hand.

Put perks to productive use

Although the Christmas shopping period is the busiest time for merchandisers, there is tremendous competition for your money, so they often give you incentives to shop with them. You can usually reap significant savings in the pre-holiday discount events used by stores to kick- start the season.

Instead of just spending the extra money that you saved from buying items on sale, how about depositing it in your savings account? You could get long-term benefits from your shopping deals and you would have something tangible to show for your savvy spending choices.

Another way in which you can profit from the season's perks is to use your salary bonus cheque or remittances from overseas for productive purposes instead of careless consumption. Use some of the funds to boost your investment account, or purchase assets that will grow in value over time.

Give gifts that keep on giving

As children, most of us did not look forward to opening a present that was enclosed in an envelope, as we knew that it could not contain the toys that we really wanted. Back then, we really didn't appreciate or understand the value of receiving a Christmas contribution of cash.

While youngsters today may probably think the same way, giving a monetary gift can be a practical way of encouraging them to develop healthy financial habits. Instead of putting disposable cash into their hands, you can purchase a gift certificate to open an account at a financial institution.

You can use the opportunity to point out to your children how quickly they abandon expensive new games and gadgets, which only represents money being wasted. Show them how much they could gain from their gift if they choose to save or invest the funds for future cash flows or profit.

Focus on future fortunes

If you also considered profitable options for the cash channelled into consumer goods, you may be surprised at the possibilities. Let's say that you want to use $50,000 to buy gifts, food, decorations and household accessories during the holidays. What's the opportunity cost of your spending?

If you put that amount in an investment with a net return of six per cent per annum, at the end of one year, you would have earned about $3,000 on your funds. Not at lot of money; but if you continued to put aside this amount for another five years, you would have amassed over $350,000.

Better yet, if you decided to use the money as seed capital to start a part-time business, you could probably turn over this amount several times during the course of the year. With a little luck and lots of hard work, you may be able to set aside next year's holiday spending funds from your profit.

As I've demonstrated, it is possible to conquer Christmas consumption by turning your thoughts to thrift. Once you are determined to get the most out of the money you have, you will be more likely to make the right financial decisions, no matter the season.

Cherryl is a money coach, business mentor, and founder of Financially S.M.A.R.T. Services. Her upcoming book, "The 3 Ms of Money" will reveal all the secrets she learned about financial success. Get more advice on money and business matters at www.financiallysmartadvice.com and www.entrepreneursinjamaica.com. E-mail comments to cherryl@financiallysmartonline.com.

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