Tempting discounts, promotions, sales. Christmas is an intense shopping period, and a period of increased risk of falling into debt. It makes us more susceptible to manipulation and more willing to take the option of purchasing through financial instruments readily available on the market. Our attitude towards finances is crucial here. See if you are in the risk group, and make sure that Christmas doesn't end with a negative balance.
"In your face" expositions, smiling staff, and the cheerful mood.
This is the way that shops remind us of the upcoming Christmas - the time of rest, happy moments with the family, tables full with delicious meals; also - the time of really big expenses. According to Deloitte's recent "Christmas shopping 2015" study, the Poles are planning on spending 10% more (1282* PLN) for shopping than the year before. This is a big sum, and it can turn into a debt, if not managed carefully. What to do not to fall into that trap?
The "Portrait of indebted Poles" study carried out for KRUK Group shows that the major factor behind our money balance is our personality, attitude to finances, and the values that we believe in. The study produced five characteristic personality types: The Forgetful, Indebted for others, Avoiders, Careless and Lost. What should be the attitude of the members of those groups towards Christmas shopping?
This is the group that most often falls into debt, because it forgets to repay several installments, or forgets about the liabilities altogether. The debt is quickly paid however, after the debtor reminds himself of it.
KRUK's ADVICE: We usually live in a rush before Christmas, with plenty of matters at hand. Credit installment repayment or phone bills can be easily forgotten in the hurry. It is good to manage a calendar of expenses, where the dates of repayment of liabilities are entered for each month. This can help avoid situations of not paying bills timely.
Indebted for others
The representatives of that group are ready to spend almost all the money for their close relatives. Therefore, Christmas is a very dangerous period for their wallet - especially when they're willing to organize Christmas for their entire family, buy a PC for their grandson on credit, expensive gifts for all of their relatives, and even to guarantee someone a loan. The happiness of the close ones is more important to them than their next year's budget, which will have to include not only the PC installments, but also a credit for preparing the Christmas. Only then it may turn out that there is not enough money for paying all the liabilities.
KRUK's ADVICE: Before you decide to help others and buy expensive gifts, think about your current situation twice, and consider whether or not you are going to face some major expenses next year. If you can't afford supporting others, do not be afraid to tell them. Do not bear all the costs of organizing Christmas - after all, they can be split! It is also worth remembering that presents of any sort are first and foremost a symbol, and a proof that we keep the close ones in our memory; the gifts do not necessarily have to be expensive and exclusive. Moreover, they can be prepared on your own.
Christmas is, unfortunately, another opportunity for this group to fall into debt. As they often act spontaneously, they can easily fall into the trap of another discount or other incentive for buying Christmas presents. After all, they never even consider depriving themselves or their close ones from Christmas gifts, a large Christmas supper or other attractions. Their purchases may often be driven by the will to... show-off in front of the friends, and to live beyond one's means, so typical for this group. Considering the above, it is no surprise that 40% of the Careless is in debt due to unpaid loan.
KRUK's ADVICE: Consider doing the Christmas shopping on the web, where prices are often lower. If you decide on conventional shopping, however, think about what would really make your close ones happy. Looking only for specific things will help you prevent unplanned, impulsive purchases.
This is the youngest group, whose members rarely think of the future. Its representatives are therefore willing to sign an unnecessary phone contract, for example, only because some provider offers an expensive cell phone that they like. In time it often turns out that they are not able to pay the bills in time. This is a tough moment of realization for them, often effecting in avoiding the consequences of the decisions made, only making their situation worse.
KRUK's ADVICE: Before going shopping you should carefully plan how much money you can spend. Make a small reserve, but make sure the final amount doesn't disturb your financial stability.
In case you want to hire purchase things, or sign a long-term agreement, do a careful simulation for the upcoming year, assuming various scenarios that can happen in life.
The representatives of this group are usually persons with a bad financial situation, who have to tighten their belts. These are mostly elder persons, who can't find themselves in the world of finance. Therefore, if they decide on a Christmas loan, or some unique discount, it can often turn out that, due to their unawareness, they will choose the least beneficial offer, or even fall victim to manipulation.
KRUK's ADVICE: Always ask for an advice of someone you trust, who has bigger knowledge of finances than you do. If the offer you analyze together turns out to be good, then it's best if the trusted person assists you in the purchase or at signing the agreement. What for? To read the agreement through, help calculate liabilities and explain any doubts. That way you make sure you never sign documents that do not conform to your needs.
Regardless of the indebted persons' group you belong to, always stick to the basic rule: calculate your financial capacity realistically, basing on the calculation of your expenses. Only careful calculation and reason can prevent unnecessary expenditure, and the resulting debt. If you give these issues a thought early enough, the upcoming Christmas will certainly be financially safe.
*"Christmas expenses of Poles - rational or impulsive purchases?" - study conducted in November 2015 by Deloitte.
**"Portrait of indebted poles" - study performed by Maison Research House for KRUK Group between October and November 2015.