Get Christmas budgeting now
If you put your gifts and the festive ham on tick these holidays, the bills and stress will soon start rolling in. Andrea O’neil talks to budget advisers about how to keep your wallet merry for next Christmas.
Summer holidays should be about relaxation and fun but all too often a financial hangover from Christmas ruins the silly season.
People who put presents and food on credit cards in December will feel the pinch in January, said Porirua Budget Service manager Robert Antonio.
‘‘Bills start rolling in. ‘ Take now, pay later?’ Well, the ‘ pay later’ is after Christmas.’’
Make a resolution this summer to get your money sorted for 2013, Mr Antonio said.
‘‘It’s so important to have a budget – so important. When you have debt hanging over your head then you get nowhere.’’
In the year to June 2012 the Porirua Budget Service saw 819 clients, owing a total of $13,713,537.23, more than $16,700 a client on average. Budget advisers helped clear $1.6 million of that debt. In the greater Wellington region 4800 clients were seen by family budgeting services, owing a total of $55m or more than $11,400 of debt for each client on average.
A good first step towards a healthy bank account is to visit a budget adviser, Mr Antonio said. They can be found throughout the Wellington region, and visiting one is free and confidential.
People are often in a desperate situation when they visit a budget adviser, saddled with credit card debt and finance company loans, and spending more than they earn, Mr Antonio said. ‘‘The majority sadly are all in debt. ‘‘The thinking is ‘let’s live for the now’. You talk about savings – well, for some of them they’re far from that point.’’
Clients have often simply stopped paying back their debt or have failed to pay rent because of loan repayments, he said. ‘‘A lot of people forget they’re in a contract and they think they’ll just stop paying because they don’t have the money.’’
Eighty per cent of clients are referred by Work and Income, many of them solo mothers.
Maori make up 40 per cent of clients with Pakeha and Samoans 20 per cent each.
‘‘The majority of our clients are Pacific Island and Maori and sadly, the financial literacy is not too good and so a big part of our work is education,’’ Mr Antonio said.
To deal with the crisis a budget adviser will phone creditors and try to negotiate reduced or delayed payments.
Then the adviser and client will work through a budget worksheet, listing all sources of income and all planned expenses such as rent or mortgage payments, vet fees, petrol and even the cost of clubbing, depending on the client.
It’s often a shock for people to see where their money goes, he said. In
the case of cars, people seldom plan for the cost of registration and warrants of fitness. ‘‘People think of cars as petrol only.’’ Lavish weddings and funerals often derail Pacific clients’ budgets, Mr Antonio said.
Since personal finance is typically not taught in school, budget advisers often have to introduce the concept of a budget to clients, he said.
‘‘Some people are hearing the word ‘budget’ for the first time when they come here. That tells you they haven’t got a clue. You’re going back to basics and teaching them those things.’’
Seeing a budget advisor more than once helps keep people’s budgets on track, Mr Antonio said.
‘‘We’ll deal with the crisis but we encourage everyone to come back and see us.
‘‘Come to us when times are good as well. People think of the Budget Service as the last place to go because you’re in trouble. It’s for everybody.’’
Don’t be frightened by the idea of somebody poring over your bank statements, said Annette Kennedy, a budget adviser at the Porirua office.
‘‘We’re not scary, we’re not judgmental. It’s all private, confidential.
‘‘It’s all just helping you find out what’s happening with your money,’’ she said.
Clients wanting to reduce their spending can get tips from a budget adviser, and can ask to learn how to read and understand an electricity bill statement, she said.
Ideas for cheap or free Christmas gifts are available for clients to take away.
Another tip for Christmas is to join a supermarket savings programme which pays interest, rather than putting money into schemes such as Chrisco. But whatever your savings method, start as soon as possible, Mrs Kennedy said. ‘‘Start in January for Christmas 2013.’’ You don’t have to be poor to see an adviser, said budget adviser Shirlene Manawaiti. ‘‘We’re here to help anybody. ‘‘People seem to have the perception you have to be in trouble to see a budget service but we can actually help people with money.’’
Coin drops: January is the time many families struggle with money, as credit card bills roll in from December’s gift and food purchases.