mmg.com.au

With many people splurging on presents, food and alcohol over the silly season, it is not uncommon for people to rack up credit card debt.

Echuca’s Tejana Abbott loves to shop, so she knows all too well about how easy it is to over-spend.

Still in her first year as a hairdresser’s apprentice, 19-year-old Tejana doesn’t earn much and with a car loan to pay off, money is tight.

“For me, over-spending is easy ’cause I don’t have much,” she said.

“Because I have a loan, I have to make sure there is money in the bank so it doesn’t get overdrawn, but it’s hard.

“I have to buy clothes for work, as well as food.”

Christmas was a particularly difficult time to curb spending habits, with presents to buy, bills to pay and social functions to attend, Tejana said.

“It can get stressful,” she said.

Money woes can affect your overall health and can lead to anxiety, frustration and a sense of hopelessness.

However, there are ways to get your finances on the right track again, according to Echuca financial planner Alison Kable.

“Over-spending and over-drawing on credit can be big issues over Christmas, so it’s a good time to do a budget and stick to it,” Alison said.

“A budget planner will cover spending, essential and discretionary.

“While creating an awareness of what’s coming in and going out, it’s enormously satisfying and can help you feel in control of your holiday, clothing and savings budgets.”

Alison has designed her own budget planner spreadsheet, but free online planners, like the one at https://www.amp.com.au, work in a similar way.

After entering your income; general expenses, including financial, home, living, personal care and education expenses; car/transport costs; insurance/superannuation; leisure/entertainment and taxes, fees and charges, the tool calculates whether you have a surplus or deficiency and breaks down your budget on a weekly, monthly and yearly basis.

“When you make a budget, be realistic about it. If it doesn’t work, you can do one of two things – earn more income or spend less,” Alison said.

However, living in a materialistic world, cutting back on spending can be difficult for many.

“My concern is that often people don’t really know they’re living beyond their means as every month is different with the amount of bills, which can give them a false sense of security in some months,” Alison said.

“If you have a cash flow deficit and are carrying over credit card debt, then you’ve got a problem.

“If you have credit card debt, it makes sense to take advantage of interest-free periods to clear it.”

The best way to avoid credit card debt is to go with a low-interest option and pay the card up every month, or switch to a debit card, which can be used like a credit card but the money is your own, according to Alison.

“A debit card is also a very good idea for internet shopping, for security reasons,” she said.

“Saving as little as $10 a week can really help in the long term.

“Anything is a saving and it’s the mindset that savings creates, as well as giving you a buffer against unforeseen circumstances.”

Alison stressed the importance of having a plan B if you become ill or injured and were unable to work.

“Your biggest asset is your ability to work,” she said.

“We protect our cars and homes and other assets, but often forget to insure ourselves.

“If you don’t have income protection insurance, you need to consider the consequences should you be unable to work due to illness or injury and you exhaust your sick pay entitlement.”

In a materialistic world, the lines between needs and wants are almost indistinguishable.

Every passing trend, fad and craze seem to be another pit-stop in the pursuit of happiness.

However, separating needs from wants can help you prioritise what’s really important in life.

And when it comes to your emotional health, the old-age saying claims ‘Money can’t buy happiness’.

Ways to lower your financial stress:

- Bring your lunch to work. Food is almost always cheaper at a supermarket than a restaurant or cafe.

- Separate wants from needs. Do you really need that 50-inch flat screen television or pay TV connection?

- If you need to buy a car, buy a fuel-efficient one. Make a budget and stick to it.

- Avoid using credit to pay your bills.

- Instead of buying a book or magazine or renting a video, go the library. It’s free.

- Lower your energy bill. Turn off appliances and lights when you are not using them and buy energy-efficient lightbulbs. 

- If possible, avoid credit cards. If you must have one, be sure to shop around for the lowest interest rate and take the lowest limit you can.