Five ways to save the day

In the leadup to Christmas it's tempting to overspend and use credit cards. This overspending often continues into the New Year with extra food needed to feed visiting friends and family. Linda Hall asked Hastings Budget Advisory Service co-ordinator Kristal Leach some questions about avoiding starting the new year in debt.

1 What is a simple plan for a weekly budget?

A budget is simply a road map to achieving your financial goals. A simple household budget should make provision for your regular weekly, and monthly expenses, but importantly also your annual expenses, such as rates, insurance, car registration & WOF. Make sure your budget includes provision for expenses like birthdays, Christmas, medical bills. Total all your expenses, convert the monthly and annual expenses to weekly, and deduct them from your income. Hopefully there is a some spare cash left over to save.

A good budgeting tip is to use a separate bank account for all bills. Work out how much you need to transfer to this separate bank account each payday, and set up APs to pay all your bills from this account. What you have left in your everyday account is money for you to spend on discretionary items and/or put aside for savings.

2 Tips on how to avoid the temptation to use credit cards?

My advice to clients is to leave the credit card at home. Instead, take out the money allocated for personal spending in your budget as cash. A wad of cash is a very powerful motivation to spend sensibly as you have to physically count out the cash! Banks often write offering to increase your credit limit - DON'T. If you cannot pay off your credit card bill every month, then increasing your limit will make things worse.

3 How long does a debt impact on the family?

It depends on how much of their income is allocated to debt repayments. If you have worked out a budget and have enough money to meet the debt repayments, taking out a loan can be a useful tool for buying something now and getting the benefit of it, e.g. a new washing machine or vehicle. The temptation is to borrow more than you need, and finance companies are often good at offering you more money than you require. Say no and stick to your budget.

4 Some people are too proud to seek help. What would your advice be to them?

Household budgeting is for everyone, not just families on low incomes. Everyone can benefit from saving, whether for short-term goals such as a summer holiday, or longer term goals such as a deposit on a home. My advice is to come and talk to us at Hastings Budget Advisory Service. We have qualified friendly, non-judgmental advisers, who have experience in helping clients achieve a balanced budget and good tips on managing your debt repayments.

5 Is the problem getting better or worse in Hawke's Bay?

Hawke's Bay has good seasonal work opportunities starting now, but it is really important for people in seasonal work to budget, as putting aside money for the off-season is crucial. We recommend setting aside some money every week to cover emergencies.