Millennials Investing: Focus On Good Money Management Over the Festive Period
December has arrived and with it the festive period of parties and presents. As fun as December is it can also be stressful from a financial point of view. Countless parties to attend at which you inevitably spend more on drinks than budgeted for and feeling the obligation to perhaps invest in some new outfits to impress in. Presents for family and friends can be an expense which quickly mounts up for those who have larger families or are especially sociable. And throw in additional sundry expenses like new Christmas decorations or the office Secret Santa or Christmas jumpers day that you need a blingy new piece of knitwear for.
Even for financially responsible millennials who are normally good with their money and have started investing online from a sensible young age with a nice pension pot for the enjoyment of later years in mind, it’s easy to be thrown off track at this time of year. A recent survey conducted by Aegon, the investments, pensions and insurance group indicates that 66% of millennials who responded said they felt ‘under more financial pressure than normal’ over the festive period. In fact, 66% sounds pretty optimistic. Are 34% of millennials financially well organised enough to save up a Christmas pot over the rest of the year so their December outgoings are comfortable covered? Or evenly spread out their presents and party outfits purchases over all 12 months of the year? Where is that sizeable chunk of the millennials demographic, or any other demographic for that matter, hiding?
The problem is that spending too much over Christmas and New Year can often lead to a financial hangover that extends deep into the new year. If you normally set aside a stable part of your income for investing online in an ISA or other financial product, that could be compromised if you have scary credit card deficits to deal with post-Christmas.
So ahead of this Christmas period, do yourself a favour and set aside a couple of hours over the next few days to do a little financial planning. Even setting aside the avalanche of expenses coming up over the next few weeks, this will be a good exercise to stand you in good stead over 2019. Have a look at your current finances and set aside what you can realistically afford to spend over December. Every time you have a Christmas and New Year related expense, note it down and subtract it from your budget. You might even consider opening an account with one of the new online only fintech banks like Monzo, Starling or Revolut. They allow you to split your money into distinct ‘pots’ so you can set up a Christmas ‘pot’ and just spend from that.
It sounds very simple and it is. But just putting down a budget on paper, even if it’s virtual paper, can go a long way to helping you stick to it rather than vaguely tallying up expenses in your head and then avoiding doing so once you get a sense the figures won’t make good reading. It will help tip the margin calls such as whether to buy one more new dress, shirt or jacket for a party or go with the perfectly good clothes you already have or whether to splurge an extra £20 or £30 on a present for someone. These margin calls falling on the right side of prudence are what is likely to get you into January without a Christmas deficit of several hundred pounds.
And getting by without incurring that deficit will mean you are not tempted into compromising your long term financial goals such as investing online into a pension or savings pot for an apartment.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.