Helping hands as family costs pile up
Budgeting services are expecting an influx of people as the Christmas hangover fast becomes a back-to-school nightmare. Tao Lin reports.
For those with school-age children, January and February are utter financial hell. Christmas has just been, the bank accounts have seen far better days, the kids need to be entertained and soon, it will be time to get them ready for the school year.
That means somehow finding the money for stationery and uniforms, potentially a laptop or other technology and school donations.
With big money spent on the Christmas just gone (an estimated $5.9 billion was spent last month, according to Paymark), it would be no surprise to see budgeting services bursting at the seams in a few weeks’ time.
New Zealand Federation of Family Budgeting Services chief executive Raewyn Fox said family budgeting services around the country usually get busy in the last week of January and first week of February as people, particularly those with children, struggle to make ends meet.
Clients ranged from those on the benefit to households where both parents were working.
The problems varied for different socioeconomic backgrounds, but the fundamental issue was the same. ‘‘They still actually don’t have enough money to meet all their basic outgoings. A lot of that is the cost of living and housing,’’ Fox said.
Usually people cut it close with their finances, leaving no money to spare, and put themselves at risk of unexpected expenses. Things such as the kids needing new school shoes all at the same time or the car breaking down were enough to tip people over their financial edge.
Fox said good financial planning was the key to having that emergency fund in case something went wrong.
Researching last-minute finance options was also important. Getting a quick personal loan might be the easiest option, but there were often huge interest rates.
If the car was at the garage, for example, Fox said it might pay to talk to the mechanic about payment plans, maybe ask family for some help or even approach the bank for a loan.
Saving yourself the stress for next Christmas is as straightforward as starting to save now and importantly, not touching the money, Fox said. ‘‘The sooner you start the easier it is.’’
Davie Boyle, group manager of education and retirement villages at the Commission for Financial Capability, said many people started planning for Christmas too late and had to scramble for money to pay off the debt afterwards.
Not only was it important to start saving early by setting a savings goal early in the year, but people also needed to work out a plan for how they were going to reach that goal.
He said it was helpful to work out exactly how much you spent this Christmas so you knew how much to try and save for next time.
A savings calculator on Sorted.org.nz, which is run by the commission, could tell people how much they needed to put aside each week based on how much they needed to save by Christmas.
Building up a buffer for unexpected expenses throughout the year was crucial.
‘‘We know it isn’t an easy thing to do, but start with whatever sum you can afford, set up a regular automatic payment and try to forget about it until you really need it,’’ Boyle said.
‘‘The relief you’ll feel then will be worth the effort.’’
The Salvation Army was also expecting a surge of people approaching it for financial help in the next few weeks, with the biggest increase always coinciding with the back-to-school period.
A spokesman said there was a lot of pressure on families to spend money at Christmas and there were added costs from being on holiday.
For those considering Christmas savings schemes as an option for next Christmas, the advice appeared to be: Proceed with caution. Consumer NZ researched various schemes in 2014 and found big differences between the offerings.
It found Christmas hampers were consistently expensive: Researchers found that the same items found in a Chrisco’s Traditional Festive Food Hamper sold for $465 could be bought from Countdown’s online shopping site for $386 including delivery.
A Christmas Catalogue Company hamper sold for $990 could be matched for $606 including delivery if you were just buying the items yourself.
Supermarket Christmas clubs were a better option, as they gave people the chance to put away money for Christmas and people could choose what they wanted. Some stores also had special promotional offers for club members.
Consumer NZ chief executive Sue Chetwin said supermarket Christmas clubs could be a useful option for saving for Christmas. However, rather than sign up for a Christmas hamper, she said it would be better to put that money into a savings account.
New Zealand Federation of Family Budgeting Services’ Fox said supermarket Christmas clubs were generally good value and they might help to free up money for other expenses.