QUESTION: I want to give something special to my relatives and friends every Christmas. Time and again, however, I found myself short on spending money as whatever extra income I had earned went to paying past debts. Do you have any suggestions on how I can use the little money I have to buy special gifts? —posted on PFA’s “ask a friend, ask Efren” service at www.personalfinance.ph
Answer: Everybody wants to give more than just presents from the store during the Christmas season. But before I make suggestions, allow me to also provide some tips as to how you can avoid running out of cash for the holidays.
Give a third party some veto power over your spending choices. This veto can be as simple as moving your funds to a passbook account where withdrawing money becomes a chore. The long lines at the bank can easily discourage you from withdrawing your money. Take advantage of the service of some banks of periodically transferring your money from your ATM to another account of yours within the bank.
You can also try leaving your ATM at home as many ATMs now double as debit cards. Another way is to invest a good sum of your periodic income. For effective control, invest in vehicles that have high pre-termination or exit fees. Provided your money is in for the long haul, you will have a low chance of incurring such fees anyway.
Keep your 13th month pay and bonuses in a savings account first, for at least half a year. The longer you keep such income saved, the more you will not want to easily part with it.
But before you cede control over your money, please make sure you prepare a budget so that you don’t feel suffocated by your strategy of spending money deprivation.
Buy gifts all year round as they are cheaper when there is no seasonal demand. Make a list and check it twice. Include the cost of the gifts on your list so that you have a target amount to spend. Just like the sun that shines on all, buy for all people you know; but keep within your budget by perhaps spending less for the naughty and more for the nice.
As much as possible, spend throughout the year using your own money. If you use loans or credit cards, you are using someone else’s money. By using other people’s funds, you get a false sense of seemingly unlimited wealth and can end up biting off more than you can chew.
When buying, be also aware that there are four kings of pricing in Christmas, especially for electronic gadgets, furniture, home appliances and computers. These kings are cash, straight charge, installment and suggested retail price. By law, however, there should only be one price tag and items cannot be sold below the amount indicated therein. So ask what kind of pricing an item has. And as a general rule, cash is the true king as it would be the cheapest.
Now on to making do with what you have when buying gifts for others. My advice is to be honest. Hey, if you are a poor boy or girl too, then you have no gifts to bring. Learn from those who suffer from abject poverty. They give the only way they know how, from the heart.
That is why making your own gift would be more meaningful than the most expensive item you can buy. And don’t search the Internet. Probe the mind of the people you will be giving gifts to and see what their interests are. Then, create something from inexpensive materials that will highlight their interests and give praise to their achievements. You can even add a cheesy pick-up line to the greeting to put a smile on their face.
Around 2,000 years ago, mankind received a gift that did not come in glittering packaging, just in swaddling clothes. It was uniquely creative. It was given with the interests of mankind in mind. It was given from the heart. It’s time we do the same all year round and live the 365 days of Christmas.
If you want to learn more about cash, debt, risk and wealth management, please visit www.personalfinance.ph. You will find a lot of free useful resources there. You may also attend the 2014 EnRich™ personal finance trainings as follows: Feb. 8 in San Fernando, Pampanga, March 1 in Baguio City, March 8 in Davao City, March 15 in Cebu City and March 22 in Metro Manila. Details for the next EnRich™ may be found on the website.
May you have a blessed Merry Christmas and a prosperous New Year.
(Efren Ll. Cruz is a Registered Financial Planner of RFP Philippines, personal finance coach, seasoned investment adviser and bestselling author. Questions about the article may be sent by SMS to 0917-505-0709 or emailed to efren@personalfinance.ph. To learn more about the RFP program, attend a FREE orientation on Dec. 12, 7 p.m. at the PSE Center. Email info@rfp.ph or text <name><e-mail><RFP> at 0917-3464126 to register.)