The one topic that was on everyone’s mind as we are approaching winter as well as the holidays, should I enjoy myself or should I start saving? Well, why not both?
The news of a possible recession in 2023 is no longer considered “hot”. We all saw the signs and we saw inflation eating a pretty big portion of our income. We also heard about the massive layouts that many of the big names on the market are doing.
In Europe, we saw the price of the gas and electricity go up and we also saw what a war at our borders looked like. All of this after the 2 years of pandemic that locked up inside our homes.
Adding all of those, on top of Brexit, we might end up in a pretty unstable situation in the upcoming year, that requires us to be smart and act smart.
But all of this doesn’t mean that we need to lock ourselves (again) in our houses and throw away the key, it also doesn’t mean that we need to ignore the “most wonderful time of the year” and miss out on my personal favourite time.
Here are a few tips on how to make the best of Christmas while still thinking ahead and planning for what could be a difficult year.
1. Plan your gifts
We are in the sale period and it might be good to plan your list of presents and add your budget to it.
One big mistake that is made during this time is forgetting that gifts should be symbolic and should NOT cost you an arm and a leg.
From books to candles, movie tickets or skating vouchers, all would make great gift ideas that will not put your budget in jeopardy.
2. DO NOT TOUCH YOUR EMERGENCY FUND
In European culture, the emergency fund is a new concept that we need to embrace and start gathering.
Even if most countries in the EU cover medical emergencies, there are still so many other events that could make you go into debt that you should have and treat as a priority this type of fund.
From a car issue, a pet health issue up to a pay cut, all of this should be taken into account when building your safety net.
Yet a bigger issue than not having this fund at all, is treating it as a spare change when you need to buy stuff. Gifts or other non-necessary items often make people chip away their emergency fund, so please please, don’t fall into this trap.
3. Credit cards for Christmas
With the inflation increase we also saw a huge increase in banking fees, so don’t fall into the trap of using your credit card to buy Christmas decor or any other aspirational item that you are advertised.
If you know yourself to be tempted, leave your card at home or cut it in half. It’s not worth paying more for an item that in 4 weeks will gather dust at the bottom of the closet.
4. Learn how to host meals/parties/gatherings
Going out is great, but during this season you might need to be smart about how you will spend your money.
Instead of going out every night, think about hosting a dinner at your or your friend's house. Cook together and learn how to have fun while spending a quarter of what you would spend going out.
If you do this in rotation, you will not only save money, but also embrace the huggy that the Danish love so much.
5. Don’t panic!
I left this for last, but I think it’s crucial to be rational during this time. By panicking not only that you will make your life (and possibly the life of the people around you) a nightmare but it could also lead to making impulsive decisions.
Such as: revenge buying, selling your investment portfolio, investing in risky areas (crypto) or are scams that might look like a great short term win.
Recessions are part of the economic cycle, happened before and will happen again.
It will not be the end of the world and with just a bit of planning could be overpassed. Perhaps it’s not even going to happen, so there's still time to bullet proof yourself as well as enjoy the holiday season.
How do you prepare for 2023?