It’s the season to be jolly! And its also the season to spend a lot of money and end up broke by January. Then spend some money on January Sales and end up in serious unrecoverable debt by February!
However much I try and keep tight with a budget during the year, I always end up spending far too much money in December. The gifts, the parties, the drinks events, the holidays! It all adds up to a big fat hole in your future net worth. But surely, you can have all the trimmings and still manage to FatFIRE, FIRE or whatever FI denomination you follow?
For this we need the help of the Ghosts of Christmas past, present and future…
Ghost of Christmas’ Past
Oh what joyous times. Family, food, music, sing-a-longs, drunk uncles and family feuds that were to come. We are originally from South Asia and would not have typically celebrated Christmas back home. But in an act of integration in the UK, my community took to the festive season without any hesitation. Any excuse for a piss-up!
We would always have some sort of party and the venues would alternate through the extended family each year. My parents made sure that one of the events, whether it was Christmas Eve, Christmas Day, Boxing Day or New Years Eve, was at our place.
My mum would cook a feast and me and my cousins would decorate the house with whatever we could find. We had a real Evergreen Tree in the back garden that resembled-ish a Christmas Tree. Me and my dad would head out and chop down the most “cone shaped” branch and put it up in front of the bay window of our Victorian terrace with fairy lights, tinsel and baubles. That was my favourite part of the whole thing! I used to boast to my mates at school that we chopped down a tree, just like Macaulay Culkin in Home Alone (although it didn’t really look the same and 1/2 the size).
We never really got presents. Maybe a new jumper from my mum. Most people would come with food for the dinner or chocolates. The main thing was that we were together. We never went on holiday and January sales were not something that my Dad encouraged! We bought clothes and stuff when we needed them. Read more about my journey and upbringing.
We would spend:
- Gifts: £60
- Decorations: £20
- Food: £120
Total: £200 over the Christmas season. Not a penny more.
Ghost of Christmas Present
The last few years have been a lot different. Growing up Christmas was just an excuse for a party for my parents. But as I got older, it became much more important. It was and still is my favourite time of the year. But my spending started spiralling. I would be frugal through the year and then just splash out in December and January (yes – it would extend that far).
It started with Christmas decorations and Christmas Tree (we use a plastic one although one year we got a real one). We decorate inside and outside and we always end up buying a new item each year.
Then there was the gift list. We buy gifts for everyone in the family, all the kids in the extended family and then gifts for our kids and each other (me and FatFIRE Mum). Our gifts end up in the luxury end. Whether it be jewellery, gadgets, designer clothes or luxury experiences. The kids get something fairly meaningful too. Others get something reasonable (£10-20 Budget per person).
Then there are the drinks and gatherings with friends and work colleagues. We end up buying rounds, participating in a secret Santa and chipping in for a Christmas meal.
Then the big day! Christmas dinner at our place. The whole family comes. Food, music, games, drinks and fun! I do all the cooking and we have everything from a Roast to Steak or FatFIRE mum’s famous Biriyani.
Once all of this is over, we jet off on a Luxury Winter Break!! This became a bit of a tradition. Somewhere exotic and warm. Middle East, Indian Ocean. Usually 5* and something that was highly rated on TripAdvisor which cost a small fortune!
Then when we came back, we would have a New Years event somewhere followed by January sales which would be an excuse to buy a small wardrobe of clothes and junk for the next year.
- Decorations: £50
- Drinks and Socials with Work and Friends: £200
- Gifts: £1500
- Food: £250
- Holiday: £4000
- Sales: £500
The future (we’re skipping the Ghost part)
This should be the doom and gloom part with the Christmas ghost that looks like the Grim Reaper. But instead of going through the future where we have no money left because we spent it all, I will cut to the chase. £6500 was our average spend on Christmas. You would think with such a spend, we would have had an absolutely amazing time. We did, but I could never recreate the happiness from my childhood. I enjoyed Christmas so much as a child and it cost us £200. Spending another £6300 never gave me 33x the happiness. I realised that it was never about the money, it was always the people!
So we decided to cut down and cut down hard. Cheaper parties, cheaper gifts, less socials, less events, no holidays, no sale shopping, and it worked!
- Re-use the decorations – £0
- Cut down on the number of socials: £150
- Have a total gift budget: £500
- Have a total food budget: £200 (part funded by Tesco and Sainsbury’s points saved over the year ~£50)
- No Christmas Holidays: £0
- No unnecessary Sales Shopping: £50
Total: ~£1000 (give or take £50)
This is not the £200 Christmas I grew up on but much cheaper than the £6500 I was getting used to. We are happier now during December than we have ever been. We are doing the bits that give us the most happiness and dumping the bits that were just extra.
Merry Christmas Folks!
Please spend during Christmas. If there was any time of the year that you should splash out, it is now. But spend it modestly and wisely on the things and the people that you need and love the most.
So have a very Merry Christmas and a Prosperous, Frugal, Healthy and Happy New Year!
I will be back next week with a review of 2020 and Goal Setting and 2021…
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