Diana Clement: Getting ready for that financial hangover

Banks have tools on their apps to help you analyse your spending. Photo / 123RF

OPINION:

If you're facing a financial hangover in the New Year, it might be time to stop spending now. Apart from your festive meals, eat down the pantry and fridge. Go on a spending diet and don't buy stuff.

I've never forgotten some of the naval-gazing in the book Not Buying It: My Year Without Shopping by Judith Levine. It was a really good wake-up call over what's essential and what's not. A more recent book in the same genre is Cait Flanders' The Year of Less. Two days before her 29th birthday, Flanders vowed to stop shopping for a year. She ended up living on 51 per cent of her income down from 90 per cent previously.

If you're reading this on December 19, there are still ways to slow down the spending and reduce the harm. Most people have a fridge full of food already so why not go on a pantry challenge and eat up what you've got in your pantry already? It's hardwired into us as humans to stockpile food for the lean times. Check out my pantry challenge article to find out more about how to turn random ingredients into edible meals and make space for the Christmas leftovers.

Now sit down and make a long list of what you've already bought in the way of presents and supplies for your celebrations. If, like me, you pick up presents throughout the year you might find that you have items you've forgotten about. Use pen and paper or an app to record what you have already and what you need to buy.

Do the same and plan your meals for the next 10 to 14 days. That way you won't double up when you do the big Christmas shop. Ask yourself if you really need all the trimmings with each meal. A simplified plan costs less and reduces stress.

Try and use what you already have in the pantry before spending on new ingredients. Photo / 123RF

The next question is do you really need whatever you planned to buy on Boxing Day? The answer is probably "no". We don't really need the vast majority of what's on sale.

I am as guilty as the next person of thinking I NEED new things when I just want them. Who doesn't also buy stuff that never ever gets used? Or supersizes the purchase to the top-of-the-range model? It is possible to be more mindful about our possessions.

If it's technology and replacing something you already have such as a phone, iPad, laptop and so on, the model you're looking at now should be cheaper by Easter.

If you're facing 2022 in the red then use some of that time to analyse your spending for the year and set up a budget for next year. People who budget spend less and enjoy what they have more.

Most people have extra time up their sleeves in late December and early January. You'll have even more if you stop shopping.

The banks all have tools in their apps or on their websites to help you analyse your spending. My personal favourite is Westpac's, followed by BNZ's. The banks all have a variety of other tools to help you manage your money. An alternative is to download your spending into a spreadsheet, or use a third-party budgeting app such as PocketSmith or mybooster. The most important thing is you just do it.

Once you've analysed your spending, now categorise truly essential spending and assign a regular sum of money for debt repayment. After you have that sorted look at the non-essential spending categories and target the ones that can be shaved.

Some other tips to get over that financial hangover include having a dry January. That can save heaps. Switch to spending cash. It's very old fashioned, but it does reduce what we spend.

Finally, if money is stressing you, consider talking it through with a mentor at MoneyTalks (Moneytalks.co.nz or 0800 345 123). A problem shared is a problem halved.