5 Tips to Manage Your Finances This Chinese New Year
Chinese New Year can come with a hefty price tag.
For the married ones, there are the mandatory red packets, or “ang paos” and some may have the tradition of buying new clothes. Let us not forget the big banquets for extended families to congregate on this annual affair.
As a working adult and for some, the person in charge of household finances, how can you manage your spending on special occasions like this? Here are five tips to manage your finances this Chinese New Year!
1. Set a Budget
Not setting a budget can be dangerous as you may be unaware that you are headed towards financial danger. For expenses that you can anticipate, estimating your expenses beforehand can help you to set a reasonable limit. You can consider how many relatives you will be giving red packets, and how much you plan to give to each person. Remember to include some extra for the unexpected red packets you might have to give away.
Other expenses may include the Chinese New Year snacks you may buy to host your guests, home decorations or new clothing. When you add everything up, you may be surprised at the amount you spend every year! Having a budget allows you to set the intention to spend within your means, as well as save up before the huge expenditure. If you need a starting point, here is a handy CNY Household Budgeting Sheet (IFEC, n.d.)!
2. Have Home-Cooked Reunion Dinners
Extravagant restaurants can tear a hole in your wallet, especially for large family gatherings where there are many mouths to feed. Additionally, restaurants are also likely to only offer their special New Year Sets at a higher premium. Instead of going to a restaurant, consider home-cooked meals instead. Check out these easy Chinese New Year recipes, or you could opt for canned food as well.
For those who cannot cook, organising a potluck dinner is also a great way to reduce expenditure, where each guest contributes a dish. Not only will there be a variety of cooking styles, but there will also surely be something that everyone likes!
3. Buy Ahead of Time
The closer you are to Chinese New Year, the more expensive festive items may get. Chinese New Year goodies with a longer shelf life, as well as sweets, dried goods or canned food, can be bought ahead of time.
For those who are good in the kitchen, consider making snacks for your guests, such as pineapple tarts or prawn crackers! If you want to get your hair done during the new year, visit your hairdresser before the Chinese New Year surcharges set in, perhaps around late December or early January. You can also make your own festive decorations instead of buying them, which can be a great opportunity to destress.
4. Cut Unused Subscriptions
Subscriptions have become increasingly common. Many subscribed to music streaming services like Spotify, as well as entertainment like Netflix and Disney+. It is easy to forget which services you previously subscribed to. A common sales tactic is to break down the price per month to make it sound more palatable, but these subscriptions can add up over the years. For example, for a brand new iPhone 13, you can pay about $85 per month over 24 months in interest-free instalments. This may sound attractive, but the total cost adds up to more than $2,000, which not everyone may be able to afford.
Reviewing your subscriptions can help you to free up some cash. A good place to start is by looking at your bank statements. Examples could include music streaming services like Spotify, entertainment services like Netflix or Disney+, and perhaps restaurant memberships. When deciding which subscriptions to cut, or better yet, before committing to these subscriptions, you may consider the following questions:
- Do I like it and use it often enough to justify the cost?
- Does this save time, energy or make me money?
- Is there a cheaper alternative?
5. Clear You High-Interest Debts
Clearing your debts before the New Year is not just a superstition, but a good financial habit! While mortgages for getting a house are necessary, credit card debts can easily snowball into something bigger than you can manage.
Financial Planner Lauren Anastasio suggests the debt fireball method, where you focus on clearing your high-interest debts, then add to your savings, and finally put extra money towards your lower interest debts like student loans and mortgages (Business Insider, 2019). By clearing your debts early, you can spend more comfortably within your means during the Chinese New Year!
Money is like a hive of bees; you can harvest honey from it, but if you don’t take care of it, it can sting you instead. If you want to ‘Huat’ and prosper, be sure to try out these five tips over this Chinese New Year!
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