Tis the Season to be Sensible

By Eric Hillis

We may dream of a white Christmas but, come January, many of us will find our bank accounts in the red.

When it comes to sensible spending over the holiday season, we rarely behave like wise men (or women).

A recent survey published by the Irish League of Credit Unions makes for a sobering read with as much as 80% of those questioned feeling less financially secure than last year. Although spending is expected to be down, the average Irish adult will spend over €500 this Christmas, with €170 of that amount going towards children’s gifts. A quarter of those surveyed fully expected to go into debt to finance their yuletide sprees.

Lorraine Waters is all too aware of the strain many find themselves under at this time of year. As a co-ordinator at MABS (Money Advice and Budgeting Service), she has spent the last eighteen years counselling and advising those unfortunate enough to find themselves in financial trouble. Her organisation is funded by the Citizens Information Board and was set up to combat the moneylenders who prey on the financially vulnerable.

According to Lorraine, her office in Lombard Street has become increasingly busy over the past years, thanks in no small part to the economic downturn. She describes a relatively new but growing phenomenon, the “new poor”. MABS may have been originally founded to help those from more deprived areas, but more and more of its clients are people who, only a few years ago, led comfortable middle class lives, never imagining they would require help with their finances. For many in Ireland today, a full-time job is no guarantee of financial stability. The increasing cost of travel and childcare take a huge toll on the take home pay of many workers.

Because of this, Lorraine stresses “we’re all in the same boat.” It’s easy for the unemployed to feel pressure to keep up with their working neighbours but the reality is they too will likely experience a leaner holiday season this year. In trying to keep up with the Joneses, you may actually outspend them.

Lorraine wants to get out the message that “there’s no shame in admitting you’re on a tight budget as you’re not alone”. Communication, she informs me, can cut down costs. Speaking to family members and agreeing on a spending cap for each other’s gifts can make a big difference. Likewise, a bit of thought into your own spending can help. Do you really need so much food? Remember how much of it you ended up throwing out last year? Why buy a tin of biscuits when you know your sister buys you one each year? How you answer questions like these can determine how much you save.

“Get your priorities right,” Lorraine emphasises, “don’t borrow now if you can’t pay it back in the new year.” The February credit card bill is an all too real nightmare for many. With the use of online retail stores and catalogues becoming increasingly popular, it’s easy to spend money you don’t actually have. “If you can’t afford it, don’t buy it,” is Lorraine’s blunt but sensible message. “If it’s a choice between buying a gift and keeping the lights on, the electricity bill has to take priority.”

There may be pressure to outdo the neighbours and over-indulge the kids but, as Lorraine says, we need to swallow our pride. The kids may be delighted with expensive gifts on Christmas morning but they won’t be so happy if you’re struggling to feed them come February.

Everyone should enjoy a merry Christmas, but not at the expense of a financially grim new year.