12 financial mistakes during Christmas

(Third of four parts)

WE are in the third part of our series, 12 Financial Mistakes we do during Christmas. In this installment, we will focus on the common purchases we do during this season that are questionable if they really are needed or essen­tial. Here comes in the concept of WANTS vs NEEDS.

Identifying a purchase if it is a want or if it is a need is easy. You just need to ask yourself this question:

Can I still live even without this thing?

If your answer is no, then your purchase is definitely a need. Otherwise, it is only a want. To simplify, a purchase is essential if it qualifies as a basic need such as:

Food (everyday milk tea and excessive consumption of hand­crafted coffee not included)

Clothes (excessive purchasing and frequent buying of branded items not included)

Shelter

Education

Healthcare

Indeed, it is easy to categorize a purchase if it is a need or a want. What is difficult is having the dis­cipline to stick to only buying the important things.

To avoid making financial mis­takes this season and to end the holidays with having a healthy bank account, let’s list down the most common unnecessary purchases Filipinos do during the holidays.

RECAP FROM THE SECOND IN­STALLMENT OF THIS SERIES:

Financial Mistake No. 1: No sav­ings for the holidays

Financial Mistake No. 2: No plan for the 13th month pay or bonus

Financial Mistake No. 3: Not prioritizing the needs

Financial Mistake No. 4: Feast on the table, feast on debts

Financial Mistake No. 5: Most Generous Child award

Financial Mistake No. 6: Ninong or Ninang of the Year

FINANCIAL MISTAKE NO. 7: APPLIANCES/GADGETS

Do you have a tradition of getting new TV or smartphone every year to keep up with the latest models? Before, you are satisfied with HD quality. Now, you want your TV to be upgraded to 4K Ultra.

Before, you are contented with a phone that has decent front and back cameras. Now, you want the latest phone that has six cameras.

There is nothing wrong with buy­ing appliances, but you must know which things to invest in. Does it really matter if your TV is now 50 inches? Does it really matter if your laptop has retina screen? Does it re­ally matter if your phone has more cameras?

Perhaps the gadget or the ap­pliance that you have still works. Maybe you can use that money for freeing yourself from debt.

Perhaps that money can be added to your business fund. Remember, these things do not appreciate in value. Once you have already used them, you cannot sell them on their original prices or on higher prices. Ask yourself if they really are quality investments.

Another mistake in purchasing gadgets or appliances is the way we purchase them. During this season, we often use a credit card or loan plans to take advantage of the so called “holiday promo.” Good news: You have a discount. Bad news: You may not have the money for it now.

In this instance, delayed gratifica­tion is key. Yes, you are happy for acquiring that thing. But you will eventually be sad because you are locked into months of paying off debt. Purchasing should add to your happiness, not to your anxieties.

If you would only delay your purchase until you have saved up enough money to buy it in cash, you will not be enslaved by the monthly bills and the monthly annoying re­minders of the collectors.

If you would only wait a little lon­ger before you purchase until you can afford it, you can freely enjoy your new gadget.

FINANCIAL MISTAKE NO. 8: REBONDING AND RUBBER SHOES

When your officemate finally sports a straight and shiny hair, for sure she has already gotten her 13th month pay. She already had brought it to the salon. The same with men.

Christmas is the common time to get new kicks because of the extra funds which are the bonus pay. Why is it that whenever we have extra money, we immediately run to the salon or to the mall, instead of run­ning towards the bank?

Filipinos have long been suffer­ing with the one-day millionaire syndrome. “I have worked for the whole year. I deserve this. I de­serve to indulge myself.” This line is the most common excuse of the Filipino working class to justify their indulgences.

This behavior is just a reflection that most of us have no long-term financial goals. We are more focused on things that would give us imme­diate happiness. We would choose to prioritize to make this kind of purchases rather than to allocate our extra funds to those things that would generate us more income.

Just like what we emphasize in this series, there is nothing wrong with these purchases, but it is not wise to prioritize these especially if you cannot afford them. Let’s restrict ourselves from making un­necessary purchases until we really have the money for it, until our savings are not sacrificed, until we can really afford them.

FINANCIAL MISTAKE NO. 9: UNPLANNED TRAVEL

Traveling started to boom in the rise of social media, especially Instagram. It is as if there are addi­tional points if you have good travel photos with the hashtag #wander­lust. Again, there is nothing wrong with traveling. Some find it healthy and beneficial for their sanity, but traveling would be more fun if it is well-planned especially with our finances.

It is not wise to travel just be­cause you have received your bonus pay. First, because it is obviously im­pulsive buying. Second, travel fare is expensive because the holidays are peak season. Third, because it is not an urgent need.

Perhaps you can travel to some other time when fares are cheaper and when tourists are not swarming on tourist spots. And lastly, simply because it is not an endeavor that can give you more income.

You may see traveling as an investment because you may con­sider it as taking care of yourself. But technically, traveling is an indulgence. You can still live even if you have not gone to Taiwan, right? Life still goes on even if you do not have photos in the palaces in South Korea.

Traveling is just one of the things in life that you must do if you re­ally can afford it and not because of clout or to keep up with your friends. Remember your long-term financial goals.

Traveling is always there. You can delay it until you have enough money to freely enjoy it without all the anxiety of paying off debt and thinking about what to eat when you come home and continue your normal life.

Yes, having beautiful hair, upgrad­ing wardrobe, and traveling can add value to us, especially to our image. However, notice that most of the time, we do this to enhance other’s perspective of us.

We may look beautiful and cool to others, but how’s our hearts and motives? How are the aspects of our lives that are not seen by the public? How’s the stability of our finances, the responsibilities we have to our families, the brightness of our future?

Always ponder on what is more important – the image we want to project or the stability of our future? It is always about choices. Be wiser this season!

THINK. REFLECT. APPLY.

1. In the past Christmas seasons, what are the things you had pur­chased that you now consider to be unnecessary?
2. Which among the mentioned points are you not going to purchase this season?
3. How can you remind yourself to always buy essential things and stay away from unnecessary purchases?