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Start saving for next Christmas

Start saving now for Christmas

Hands up who's got a financial hangover from Christmas? A friend commented this week that no-one was buying the bicycles she wanted to sell. "It's because no-one has any money left," I replied.

It really is that case that a good chunk of Kiwis blow the budget and more every Christmas. If that was you, then it's time to start saving for next Christmas.

January is the time to start. So here are some ideas to get you going:

Choose how much to save. I once heard a budget adviser say that people shouldn't spend more than 1.5 percent of their annual take-home pay on Christmas. That gives you and amount to save and to base your Christmas budget on.

Dedicate an account for Christmas. Set up an online savings account and direct-credit money to this on a weekly or monthly basis. A Loaded for Christmas Visa card from New Zealand Post is another option, but the fees are very expensive.

Open a Christmas account. Some banks, building societies and credit unions such as NZCU North offer these. But beware. The interest rates may be lower than you could get with a regular online savings account. Make sure you read all the fine print and know the rules. You may not be able to withdraw the money before a certain date — which could be a problem if you encounter and unexpected financial emergency during the year.

Start saving with your local supermarket. This is easy. The New World Christmas Club, for example, gives you a card, which you can load with money when you pass through the checkout or by direct debit throughout the year. From December 1, you can start spending it — choosing to wait for sales to make your money go further. What's really great about this card is that for every $5 you deposit on it, you get up to $5.32 to spend when you redeem, which means that you're earning interest.

Pay off your debt first. Whichever form of Christmas savings you use, it's important to pay off existing debt first. Put your head down in January and February, earn some more money if you can, cut your spending to absolute essentials, and clear last year's hangover. It's no use earning paltry or no interest on your Christmas savings when you're paying 19.95 percent on your credit card debt. You're going backwards financially if you do that.

I have to comment about Chrisco and other Christmas hamper companies of its ilk. They're for losers. A couple of years ago a Kiwi blogger compared the Chrisco meat packages with prices at the Mad Butcher. The Chrisco meat was up to 56 percent more expensive. A company called Good Guys was even more expensive.

What gets me is that you're paying for stuff you may not want or need. Why not use your supermarket's savings scheme and choose what you want to buy with your money?

The big risk with hamper companies, as is the case with any company you have a similar instalment plan or hire-purchase arrangement with, is that you'll pay your money and the company you're using could go out of business and you might not get what you've paid for.

Why is it that poor people pay more for their goods than the rest of us by using hire purchase and savings schemes? A fool and his money are easily parted.

Your say: Do you have a financial hangover from Christmas?

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