Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.
We look at how to keep celebration or one-off special occasion spending under control, as well as providing some practical tips on saving money on big events.
Dan Auerbach, psychotherapist and relationship counsellor at Associated Counsellors & Psychologists in Sydney says that people attribute significant hopes or meaning to important celebrations or events and this can lead to justifying overspending rather than setting a budget.
“Identifying the meaning of wanting to buy ‘the best’ can help you process those feelings and can help you find other non-monetary ways of satisfying those ambitions,” he says.
“One common pattern that leads to overspending on celebrations is that we want to acknowledge how special the event is to us. We then get caught up in thinking that everything we do to organise the event has to reflect this, which can lead to overspending,” says Auerbach.
“If you relate to the idea of wanting to demonstrate your affection for the person or the milestone, you can try and think of other ways to express these feelings instead.”
Tips from a financial expert
Chris Yena is a CERTIFIED FINANCIAL PLANNER® professional and general manager of Warringal Financial Services in Heidelberg, Victoria.
“Around this time of year we can often over indulge – buying that extra special gift for someone or maybe just letting your hair down and enjoying life a little. Which is great, right?
“But what about when the January credit card statement arrives – how to pay for all those little extras?”
Yena says that having access to emergency funds is a must in any household. “Ensuring you can access additional funds at short notice is vital.”
He says there are several ways to build an emergency fund:
You could hold up to three months’ worth of salary in a savings account
Access funds from an offset account linked to your mortgage
Draw down advanced paid funds from available equity in your mortgage.
“By planning in advance and making sure you not only set a budget, but stick to it, you can ensure your cash flow isn’t stretched at both planned and un-planned times of need,” says Yena.
He recommends the app Track My Spend from the MoneySmart (ASIC) website. “Or for something more elaborate, we utilise My Prosperity for our clients.”
Yena says a little bit of planning can “save you heaps.”
Keeping a roof over your head
Founder and owner of national digital mortgage broking service, Even Ground, Andrew Smith says the question of how to fund – and the impact of funding – one-off events is a common one in his business.
“We recommend thinking about how the event will impact your repayments on your mortgage and credit cards. How long will it add to your repayment period and how much additional interest will you incur?”
Smith says you need to be sure that you can repay the cost when it comes due. “As comprehensive credit reporting is now becoming a reality, any slips on your credit score could cost you in terms of borrowing and ability to borrow in the first place.”
He says if you’re thinking about using a loan facility, your offset or a “cash out option” are always the cheapest, “but have you set your mortgage up to be flexible for this purpose?” If you’ve built a good amount of equity then refinancing (a lot of the time at a better rate) and taking some cash out could be an option if you’re confident in your ability to repay.
Marion Mays is the head money mindset coach at Thalia Stanley Group – a financial literacy and wealth advocacy firm based in Melbourne.
Mays advocates simple, conscious steps that can make all the difference when it comes to daily spending habits and maintaining a grip on hard-earned cash. “The save and splurge pattern is all too common and whether it is the larger purchases or excessive shopping after a period of pulling the purse strings tight, many of us are guilty of this pattern where most saved dollars are then blown on non-necessities,” she says.
Her tips include combining conscious spending, decluttering and selling unused items on eBay, with finding less commercialised but more meaningful ways, rather than monetary items, to show you care.
“You will see that the quality of your celebrations, gifts and holidays or weekend breaks actually increases while your cost decreases,” says Mays.
Keeping up appearances
Another motive for overspending can be to keep up appearances. Most people are to some extent aware of their social setting and wanting to fit in. If you are going on an overseas holiday you can’t afford to one-up the neighbours, it might be time for a reality check.
Gifts and giving: Ideas that will save you money
Negotiate with your kids to have a birthday party only every other year
Save money at Christmas by gifting time, not money
Rather than an expensive present, offer a whole weekend of babysitting
Make home-made herbed olive oils and vinegars to give as gifts
Offer to cook for a large family dinner or lunch
For a certain period of time volunteer to do a family member’s most hated chore such as taking out the garbage, cleaning the bathroom
If you live in a very different area to the gift-receiver, offer a holiday at your place for a weekend or a week, whatever is reasonable
Clean an older relative or friend’s home, from top to bottom.
Parties and events: Money-saving tips
Pick a less expensive venue with the most neutral décor you can find. By having a relatively “blank canvas” you can make it your own.
Ask what equipment is included in the hire cost. You can also often hire performance quality AV equipment at low cost from local entertainers when they’re not using it.
By choosing a cheaper day of the week you can save a considerable amount of money. You could save between 25 and 75 per cent by holding an event on a Tuesday or Thursday instead of a Saturday.
Having the ability to dim the lights for an evening venue will make a huge difference to the ambience of the occasion.
Most companies are open to negotiation – especially if you will be using their property or accommodation when it’s not being fully utilised. Being a good negotiator could save you a lot of money on your event.
Choose the style of catering that will cost you the least money but still suit your event. Buffets as opposed to table service can be a much more affordable option but still keep the quality and standard of the food on offer high.
Pinterest has great suggestions for different but affordable events and is a great go-to site for anything of a visual nature.