Holidays Without Stress: Let’s Learn To Spend With Reason

EXCLUSIVE ARTICLES02.01.201623:07 A conversation on how to celebrate the Christmas holidays without spending too much money was led with financial expert, Dana Kushpler


- How does one, within reason, enjoy the celebrations without having it hurt their finances?

- According to the principles of financial literacy, there are certain types of expenses which include such expenses as presents, contingencies, or celebration expenses. For instance, there are contingencies such as the birthdays of colleagues, and you didn’t know about them. According to these principles, 10% are set aside for charity, i.e., for things we do not want to receive any recompense. We also set aside 10% for the so called "reserve fund" – contingencies which should be immediately extinguished. Therefore, if the distribution of costs is made immediately after receiving income, before the holidays, we already know where to take money from.

Читай українською: Свята без стресу: вчимося витрачати раціонально

There is one more point regarding presents derived from financial literacy. Within a year, we have holidays which require our preparation and take a certain part of our income. These are preparations for Christmas, St. Nicholas’s Day, Easter, our own and our relatives’ birthdays, and memorable dates. A certain author suggests making a calendar of those holidays and important dates for which you will surely spend money. Suppose, you have, within a year, a total of 10 holidays. You should divide those costs that you are ready to spend during the year for these celebrations by ten. And, for every month, you should add what you can to this amount. Consequently, there will be no financial abyss when the holiday is approaching and you have no money.

- Based on the first part of your response, 10% is for the reserve fund, and the additional 10% of the money is set aside for

- 10% for charity and 10% to the reserve fund. But it does not mean that all 10% will be for the presents. The reserve fund is also intended for medical care or similar things.

- It comes out then that one should limit one’s expenses for the holidays, logically and reasonably, to 20% of their monthly income?

- At maximum, yes.

- It is known that, in Ukraine, there is the traditional activity of caroling. And caroling, as a rule, is rewarded. The form of reward and its amount has been changed. Formerly, it was a kind of moral encouragement, sweets or other things, but it is money now. What should be adequate recompense for caroling?

- I personally hold to the principle that caroling (especially when it’s done by children or youth) should be a part of tradition.

Caroling is not a business.

It should not be for "collecting money". Since, when it transforms into a business, one can perceive it as such immediately. Yes, this is a nice motivation for children to go around and sing, but, if it is reduced to only requesting money for caroling, it won’t do. I personally feel a bit irritated by such an approach. Therefore, I usually, when receiving carolers, prepare something sweet – candies or doughnuts.  I find time to prepare it. I also add to this a certain amount of money which is not, as a rule, different from what I have planned to spend for charity. The abovementioned 10% is just divided into equal parts. Since I can roughly imagine how many carolers will come, a specific amount will be different for everyone depending on one’s income level.

- So we should make one calculation and, then, during the holidays, always use this  calculation as a basis?

- Yes.

What is your commentary regarding pre-New Year and pre-Christmas holiday discounts. How much is such massive search for discounts justifiable?

Dealing with money is like one of habits.  And it can be both useful and harmful.  It is exactly the same way as smoking or abuse of alcohol. Abuse of discounts or abuse of momentary purchases is also a bad habit. It must and can be eliminated. When we talk about financial literacy or reasonable dealing with money during the holidays, there is a principle which says: "One should avoid purchases made at the last moment". First of all, if there’s St. Nicholas’s Day, the worst thing you can do is buy presents on December 18 in the evening. Why? Because there will be many others like you, and the prices always increase.

Secondly, when we buy emotionally, we always spend more than we should. It mostly happens because we do not calculate; we do not make a list of things to be purchased. Going shopping by the principle, "I’ll go to the store and there choose something," is directed towards buying  unnecessary things. Such uneasiness ends up in spending much more.

Besides, here in Ukraine, we have a relatively different culture than in Europe or America where there are always popular pre-holiday discounts. There, they really have discounts. In our country, there are, at first, enormous extra charges and, later, putting the price to its adequate level which is posed as a discount. Our discount is not a considerable reduction of a product cost. Thus, the first lesson is to think as much as possible, in advance, what to buy. If you can buy some winter thing in the summer, that’s it. Before someone’s birthday, purchase the presents in advance.

- How does one protect themselves from trends which are often rather expensive—when a thing is considered necessary and a "must be", but, in reality, is needless.

- Personally, for me, lists are one-hundred precent helpful. If I go shopping, I think beforehand what and how much I want to buy. If I see something not on the list, I just don’t buy it. But, if it seems to me that the thing is really very-very useful, I just go out of the store and then think if I really need it. And, if I really need it, I’ll buy it the next day with a new list. However, very often, when I go out of the store, it seems to me that it was not that necessary as it seemed on the shelf. 

 

The conversation conducted by: Volodymyr Ditchuk

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Reference:

Dana Kushpler is an organizer of the training program «Financial Literacy for Youth» within the section «Quality Education» of the social initiative «Someone will not do it!» («То-Ся не зробить!»). They can be attended by any young person aged between 18-35 years old. According to the principles of financial literacy, it is reasonable to distribute one’s own incomings into several types of expenses. 10 percent are paid to yourself, 10 percent for charity, from 30 to 80 percent for living expenses (food, clothing, house maintenance), 10 percent for a reserve fund, and from 10 to 30 percent for your own education. One is recommended to set aside one’s income as soon as it arrives.

Information on the next event can be found on the website for the group «Someone will not do it!» on the social network Facebook.

 

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