Financial Planning Strategy for 2021 Christmas Holidays

BY: Andrews Ayiku

Have you begun preparing your finances for the Christmas season? In a year that has been unpredictable, especially when it comes to the economy and job security, what does it look like to budget well and spend wisely. The COVID-19 pandemic has caused financial stress for many and reshaped the way most people save and spend money. Overspending during this holiday seasons can lead to major post-holiday regrets as a result of our unwillingness to stick to our budget.

As most of us are planning on the holiday and Christmas shopping, it is essential to figure out how much money we want to spend before figuring out what we want to spend our money on. I will entreat everybody to create a budget by reviewing their financial situations especially cash available at hand and bank as against other major spending in the first quarter of 2022 such as school fees, rent, and utility bills. Some few strategies to consider include:

Analyze your current Debt: This is quite difficult and not unpleasant for all of us but is very necessary. One of the key things to consider is your debt especially for users of credit card and other debt related activities. Consumer debts include personal debts that are owed as a result of purchasing goods that are used for individual or household consumption. Think about your payday loans, over draft, mortgages, auto loans, student loans etc. and clearly set out a debt management plan. I will advise skipping unnecessary and expensive spending in order not to miss out on monthly payment as well as making the current debt situation worse.

Make a list of Expenses: After analyzing your debt, it is important to list and calculate your expanses. I will advise regular review of monthly budget to determine what extra money or expenses one can reduce to accommodate the extra spending. I personally subtract my regular expenses which include rent, mortgage, utility bills, groceries and fuel from my projected income to understand how much money available for spending. I normally keep a list of expenses especially on food related items. I regularly use bank statements and receipts when planning for my expenses. It is vital to consider your fixed expenses for those mandatory expenses which we normally pay the same amount for each time and variable expenses are the type that will change from month to month. One has to assign a spending value to each category and estimate how much you will need to spend per month on the expenses.

Creating a shopping list: Creating a shopping checklist can prevent unwarranted purchasing and wandering aimlessly in the markets and shops. A lot of us are always buying things we don’t need and missing out on those that are in need. Having a shopping list will help in keeping the consumer on a healthy trip and prevent unplanned market visits and unwanted purchases and spending. Is important to have a buy list to keep tabs on items that need to be replenished regularly. A proper shopping list will require a taking an inventory of key staple items such as eggs, milk, butter etc. which are used regularly and they need to be a priority.

Start Tracking Prices: Prices are constantly fluctuating in our parts of the world and as businesses operate in a price sensitive market, it is important for consumers to get real-time price change, inform and to respond quickly to the increase or decrease in pricing. We are currently experiencing regular changes in the price of petroleum products and consumers must regularly check prices displayed at the pump stations before making a decision. Consumers usually infer that a higher price signals a higher quality and at the same time, the higher price indicates a greater monetary sacrifice in purchasing the product. Businesses should therefore develop a pricing model which will be appealing to the target market.

Andrews Ayiku
Lecturer, University of Professional Studies, Accra