Paul's Insights: 'Tis the season to be savvy
The festive season brings lots of joy as well as demands on our budgets, and a few money-savvy strategies can help you enjoy the celebrations without overstretching your finances.
A sensible strategy is to plan gift gifting. List who’ll you’ll buy for, and allocate a spending budget to avoid last minute splurges on your credit card. Comparison site Mozo estimates we’ll rack up credit card debt of around $31.9 billion by the end of the silly season. It will all need to be repaid in the New Year, and if it could be a struggle to clear the slate before interest charges apply, regard your bank balance as your spending limit, not the limit on your credit card.
If a summer vacation is on your bucket list, be sure to include travel insurance in your plans. It makes sense to take out cover as soon as you’ve paid for major costs like airfares or accommodation. That way you should be protected by cancellation cover if your plans change – this inclusion usually only comes with comprehensive rather than basic policies, and for a small increase in the premium it’s worth having.
No matter whether you’re holidaying in Australia or overseas, think about how you’ll meet the cost of rental car insurance (which is a must have). It’s possible to take out standalone hire car cover with providers like Hiccup or carehireexcess.com.au for considerably less than you’ll pay with the car rental company. Or check if car excess insurance is included in your travel cover.
An overseas trip makes it essential to let your credit and debit card issuers know when and where you’re travelling. Overlook this, and your cards could be blocked due to ‘suspicious activity’ while you’re overseas, potentially leaving you high and dry for funds mid-vacation.
Adding to the stress of the current festive season, sharemarkets have seen plenty of ups and downs lately. If you are confident your investments reflect your long term goals, the busy Christmas period is not the ideal time to start switching assets around. Volatility is a natural part of investment markets, and acting on rushed decisions could mean taking a loss on an investment that recovers its value in 2019.
A better approach is to use the Christmas break to rewind, recharge and spend time with the people who matter to you. There’s not much point making money as an investor if you don’t let yourself enjoy those gains – sensibly.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
Frequently Asked Questions about this Article…
To manage your budget during the festive season, plan your gift-giving by listing who you'll buy for and setting a spending budget. This helps avoid last-minute splurges on your credit card, which can lead to significant debt.
Travel insurance is crucial for a summer vacation as it provides protection against cancellations and other unexpected events. Comprehensive policies often include cancellation cover, which is worth the small increase in premium.
For holiday trips, consider standalone hire car cover from providers like Hiccup or carehireexcess.com.au, which can be cheaper than rental company insurance. Also, check if your travel insurance includes car excess coverage.
To avoid issues with your credit and debit cards while traveling overseas, inform your card issuers about your travel plans. This prevents your cards from being blocked due to 'suspicious activity' while you're abroad.
It's generally not advisable to make changes to your investment portfolio during the festive season. Market volatility is normal, and rushed decisions could lead to losses on investments that might recover later.
A smart approach to handling market volatility during the holidays is to stay focused on your long-term investment goals and avoid making impulsive changes. Use the time to relax and enjoy with loved ones instead.
To enjoy your investment gains during the festive season, take time to unwind and spend quality moments with family and friends. It's important to balance financial success with personal enjoyment.
Paul Clitheroe is the Chairman of InvestSMART and the Australian Government Financial Literacy Board. He is also the chief commentator for Money Magazine, providing insights on financial management and literacy.
Call 1300 880 160
Start a chat
Schedule a call
