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Planning holiday spending, christmas gifts, etc.

Holidays, Christmas, birthdays or the start of school... How to prepare for it and not burden the family budget? Simply - by financial planning. It is important to make a plan of income, expenses. The beginning of the year is the ideal time for financial planning, but you need to work with your plan throughout the year. Prepare paper, pencil, calculator and calendar and start counting. The main rule is to stick to the set plans and the following advice.

At the beginning, write down your current situation - how much money you have in your accounts, in your piggy bank at home, or in investments. Then write down the whole family's monthly income and expenses. Think about all your expenses, not just mortgage and loan repayments, but also buying gifts or paying for holidays. It is necessary to go through all income and expenditure items. Divide them into categories.

Ideal financial ratios? Yes, finances have them too... 40:30:20:10.
Therefore, 40% of your income should be set aside for current consumption (groceries, housing costs, travel...), 30% should not exceed all regular repayments of loans, credits, leases, 20% should be set aside for life insurance, pension, and 10% should be set aside regularly as a savings and reserve (holidays, Christmas gifts, broken refrigerator...). Of course, this is true on a "normal income" (around the average wage). If you earn more, your savings or loan repayments may reach a higher percentage. If you earn less, you should not lower your savings percentage, but rather your repayment percentage (have fewer loans). The recommended percentages will also be influenced by the size and age structure of your family.

Financial planning and its principles

  • Set goals - specify what you want to buy, what you want to experience, what you want to achieve.
  • Be realistic - do not deceive yourself and honestly take into account your income, expenditure as well as assets, i.e. plan a holiday that you can realistically afford (holidays are for relaxation, not stress and showing off your "social status" to others, and the same applies to Christmas gifts, although your children may see them as a "social status contest" in relation to their classmates).
  • Discipline is the key - it is a proven fact that you are more likely to achieve your goals if you keep your eyes on them. Mark your set goals and the steps to achieve them and place them in a visible place.
  • Regular control - adherence to the financial plan is the key to success
  • Categories of expenditure - specify categories, e.g. housing, food, children, car, insurance, loans
  • Do not borrow for holiday and Christmas gifts unless absolutely necessary - we can live without these things or have less of them. Sure it is unpleasant to explain this to the family, but the family well-being created by holidays and gifts beyond their means is short-lived. At the time of repayment, the well-being quickly fades and hits your family hard.

Be prepared for these expenses during the year

Birthdays, skiing, paying taxes, Easter holidays, buying summer clothes, school trips, holidays, starting school, buying clothes, Christmas, New Year's Eve, insurance.

Better to save than go into debt

„A"If we save 10 euros for 10 months, we will save 100 euros and we will see children's eyes shining at the Christmas tree." In this way, a good feeling about correct financial behaviour will be added to children's joy.

Work with experts

A financial plan helps a person navigate their finances. Plan changes can happen at any time, but people with a plan always make better financial decisions. Creating a good financial plan is easy. Planning for positive events and avoiding potential risks can be done with a well-formed financial plan with the help of an economic advisor at the free debt counselling centre.

MSc. Denisa Haninová, Debt Consultant