Fresh start: Managing expenses

The New Year presents opportunities to turn the page and set new goals, including improving our financial well-being. After the holiday season’s celebrations and their accompanying expenses, we might find ourselves reflecting on how we can better manage our finances.

Holiday festivities come with a price tag, and as we welcome 2025, this is the perfect time to explore ways on how to become more financially responsible and to avoid the post-holiday blues that often come with excessive spending.

Spending sprees, festivities

An important step toward improving our financial management practices is understanding how our spending habits shift throughout the year, specifically during peak seasons like the holidays.

A 2023 Kantar report revealed a seven-percent surge in Filipino fast-moving consumer goods (FMCG) spending from December 2022 to January 2023 compared to non-festive months. This uptick indicates increased expenditure on food, beverages and other Christmas essentials.

Another study by Rakuten found that 32 percent of Filipinos allocated up to P3,000 for holiday shopping on apparel, footwear and electronics. Moreover, a TikTok-commissioned study unveiled a trend of early holiday online shopping, starting as early as September. The study highlighted that 74 percent of TikTok users engage with the platform daily and a significant 78 percent make weekly e-commerce purchases.

To top these off, a 2024 Visa survey showed that the December is the peak time for Filipinos to travel overseas. The most popular travel destination for Filipinos are Hong Kong, Singapore, and Japan. The survey further stated that the top reasons for Filipino travelers are sightseeing, relaxation, shopping, and dining.

These figures show the significant impact of the Christmas season on our spending behavior. While the holidays fuel a surge in spending, it also influences Filipinos’ borrowing habits.

Mindful borrowing

With the various reasons to spend during the holidays, some may resort to borrowing and maximize the use of their credit cards. This is not necessarily a bad thing as using our credit cards enables us to enjoy the holidays without depleting our savings. Here are some of the perks that come with using our credit cards for our shopping expenses:

Financial flexibility: Credit cards offer a convenient way to manage expenses and spread-out payments over time. You can avail of up to 36 months zero-percent special installment plan at partner merchants.

Expense tracking: Utilize your bank’s mobile app to monitor your credit card usage. Being able to easily track your purchases gives you insights into your spending habits. This helps you make informed financial decisions and adjust your budget as needed.

Rewards and promotions: Enjoy exclusive deals from partner merchants, and at the same time earn points and redeem rewards.

Low foreign exchange rates: Utilizing credit cards with favorable forex conversion rates can be immensely advantageous when shopping abroad. For holiday travelers, these low conversion rates translate into significant savings on purchases. For instance, the Bank of the Philippine Islands (BPI) offers a forex conversion rate of 1.85 percent, which ranks among the lowest in the card industry. These attractive rates ensure you receive the best value for your money, helping to keep expenses in check.

However, it is essential to approach borrowing with caution. Borrowing more than what you can pay for can result in debt that is difficult to manage once the holidays are over. Here are strategies for mindful borrowing:

To avoid falling into a debt trap, it’s crucial to treat your credit card like cash. Resist the temptation to overspend, and only charge what you can afford to pay off immediately. This simple practice can prevent the accumulation of unnecessary debt and high-interest charges.

To stay in control of your spending, setting a clear budget is essential. By establishing a specific amount you can allocate for gifts, travel, and other expenses, you can avoid impulsive purchases and overspending. Stick to your budget and prioritize your financial goals.

Once the holiday festivities are over, it is time to tackle outstanding debts. Create a post-holiday repayment plan that prioritizes high-interest debt to minimize long-term costs. By focusing on paying off high-interest balances first, you can save money on interest charges and reduce your overall debt burden.

Celebrations and holidays do not have to mean breaking the bank. By having a grasp of our spending patterns and adopting mindful borrowing practices, we can still enjoy festivities without compromising our long-term financial well-being. It is all about finding a balance between celebrating with loved ones and making responsible financial decisions.

Setting realistic budgets, using credit cards wisely, and creating a post-holiday repayment plan, will help ensure that the memories we create during the holidays are filled with joy and not burdened by anxiety. What better way to kick off 2025 than by equipping ourselves with financial stability and peace of mind?

Jenny Lacerna is head of mass retail at BPI where she oversees the unsecured lending and cards group. She is also director of the boards of BPI Direct Banko and Legazpi Savings Bank.