Embrace your spontaneity

Barbecues are wonderfully unpredictable sometimes. Just the way they can spontaneously come together is pure genius – someone says, ‘Come on over’ and it’s all on… at your place.

It’s also one reason holiday costs can seem nearly impossible to plan for.

Of course, I’ve also marvelled at how much food and drink can come along with the guests. Some close friends recently brought more than half of everything with them! This was generous, and certainly needed, especially since we were coming towards the end of the holidays and much had already been spent on Christmas.

As much as guests might bring, though, it’s still difficult to estimate how high the cost of entertaining will be. Or eating out. Or that last-minute road trip. Fill in your own blank here – let’s face it, we’re all a bit spontaneous, right?

Spontaneity is great, but not always great for the finances. Suddenly we’re haemorrhaging money left and right and running headlong into a dumb debt trap – carrying high-interest balances for months on end. People even end up still paying for last Christmas when the next one is about to arrive!

Overestimating the short term, underestimating the long

We all tend to overestimate how much we can take on in the short term. When we spend on credit cards, we do some quick mental accounting and tell ourselves we’ll be able to recover by the time the bill comes in. Or we may be sinking into overdraft, but we’ll dig ourselves out for sure. We’ll handle it, right?

At the same time, we tend to underestimate how much we can accomplish in the long term. Many of us, for example, are pleasantly surprised at our growing KiwiSaver balances – money that would have never been saved if we hadn’t joined. By drip-feeding our fund, and combined with contributions from the government, our employer and market returns, those balances soon even grow enough to become first-home deposits.

Spontaneous combustion

If there’s a lot of spontaneous combustion in your life, and everything is not the predictable, well-oiled machine that others seem to run their lives on, embrace that! Call it a festivities fund, a mojo fund or a spontaneity fund, but by all means put money aside for those times when Kerikeri calls and you just have to get driving.

Since setting up automatic payments into savings accounts takes all of 15 minutes these days online, it’s easy to pay yourself first each time money flows in. Get into the routine and focus on the amount you want to save right now – not next pay, not next month.

And the next time someone comes up with a brilliant spontaneous idea, you’ll be ready with the funds to make it happen.

Curing those holiday hangovers

If your finances are hurting after the holiday spend-up, Sorted’s debt calculator can help you recover. 
Whether you put it all on plastic, couldn’t pass on HP or maxed-out a personal loan, the tool can help you find the quickest way to clear your balances (and that aching head).