It’s only just December but I feel compelled to pen some thoughts about Christmas already. We’ve been through a rough year in many respects and the economic outlook both domestically and internationally remains somewhat clouded. It is ultimately the consumer that helps to drive economic growth in any economy and what we’ve seen this year is a general reluctance on the part of consumers to part with their earnings.
And yet despite all of this, last weekend in the United States saw record retail sales during Thanksgiving on what is known as Black Friday. So with unemployment there running at 9 per cent, what can explain such record volumes?
Much of the answer lies in the word ‘discount’; in other words, desperate retailers were happy to discount aggressively to encourage consumer spending after a horrid year.
However, my advice is to be careful this Christmas season and plan your spending; don’t be tempted to buy something just because it’s on sale. With some careful planning and judicious searching, you can still take advantage of good opportunities, snap up some bargains and not wake up in 2012 with a retail hangover!
Firstly, a budget for your spending over the Christmas/New Year period is a great idea. And don’t just think about gifts. Remember that you will probably entertain family and friends more, eat more, drink more and take the kids out more during the school holidays. Spending to me is like weight control; you control how much you spend in the same way that you control how much you put in your mouth.
Secondly, if you can use cash or EFTPOS it’s a way better solution. It costs you nothing, you won’t spend what you don’t have and you’ll start the New Year without a worrying debt burden.
Thirdly, don’t fall for the trap of putting everything on a credit card or a store card unless you know you can pay it off. And when I say pay it off, I mean the entire amount when it falls due. Credit card debt is expensive debt; sometimes in excess of 20 per cent interest rates.
Fourthly, let me return to the matter of discounts. I encourage you to look around online for gifts as well as other consumables that you may find cheaper than in the stores. But do it now to allow plenty of time for home delivery.
Finally, remember that Christmas is about being with family and loved ones. Don’t get caught up in the materialistic binge largely promoted by advertising. Long after the gift wrapping has been recycled, your family and friends remain. And they’re way more important than a material possession and less stressful than debt!
* Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on mark.neos@ybr.com.au with any queries you may have or check www.ybr.com.au for your nearest branch.
