As the song goes, "It’s the most wonderful time of year", but it can also be the most expensive time of the year for many families.
According to the Australian Bureau of Statistics, Australians forked out around $47.5 billion during the Christmas shopping period last year, and are likely to spend over $51 billion in 2018.
To avoid starting the new year behind the financial eight-ball, here are some tips to get you through this festive season.
Impulse buys and overspending can be easy traps to fall into at this time of year.
“The best way to avoid these is to start with a budget based on what you can realistically afford, then use this to plan your holiday shopping and other expenses,” said Kaine Adamson, Senior Manager Retail Distribution at P&N Bank.
Don’t forget to include gifts, cards, wrapping, food, entertainment, decorations and any travel or accommodation expenses. It might surprise you how quickly this can all add up so this is an opportunity to cut back if you need to and know your spending limits.
At what can be such a busy time of year full of Christmas parties, family gatherings and entertainment, the challenge can be keeping track of where your money is actually going.
“The simplest way to do this is to enlist the help of a good budget tracking app such as ASIC’s Money Smart Track My Spend, which lets you set budgets within different categories,” Mr Adamson said.
Apps not your thing? Set up a good old Excel spreadsheet (or even a handwritten table if that’s more your style) – whatever works for you to record your spending and keep it visible. By doing this you can clearly see if how you are tracking against your set limits and when you may need to rein it in.
If you have a big extended family or a large social circle who love gift giving, present buying can really add up. Rather than putting yourself – and your finances – under unnecessary pressure this year, there are some ways you can reduce the amount of gift shopping you need to do, including:
There are two extremes of festive season shoppers: one - the people who collect gifts throughout the year and have all their gifts wrapped and under the tree by the time December hits and two - those who are in a mad dash through the shops on Christmas Eve. Whichever you identify with, there are advantages of being organised. You can take advantage of sales throughout the year and pick up gift and holidays bargains, lessening the pressure at the end of the year. Make a list ahead of time so you know what to look out for.
“If you have a lot of gifts to buy, are entertaining or planning a holiday, get organised early and set aside a dedicated savings account which you add to regularly. This is a particularly smart way to approach larger expenses,” Mr Adamson said.
Alternatively, if you're more of a last minute shopper and mostly shopping for adults, consider suggesting that you all exchange gifts after Christmas and take advantage of the Boxing Day and post-Christmas sales.
As the expenses keep rolling in, you may be tempted to put purchases on Afterpay, Zip Pay or a credit card. While these can all be really helpful if you have a plan for managing the repayments, make sure you aren’t spending more than you can afford and blowing your budget.
“Don’t avoid looking at your balance on buy now, pay later apps or on your credit card – lots of small purchases add up really fast and could end up costing you even more if you end up paying fees and interest,” Mr Adamson said.
Again, refer back to that budget you set up in the beginning and swerve the temptation to buy beyond your means.
Take a look at our article about buy now, pay later payment methods.
If you are hosting a Christmas party or lunch this year, it can end up costing more than you anticipated. If you know you will be hosting, save a little bit on regular intervals such as fortnightly in the months leading up to Christmas. You can also ask guests to bring a plate or enlist a friend or relative to help you prepare food – by preparing your own salads and desserts you can save. Decorations from previous years can also be reused and less may be more – once your home or venue is filled with people you won’t need too many decorations.
While budgeting and spending smart this Christmas will set you up for a brighter new year, it is also the season for relaxing and enjoying time with loved ones. We wish you all safe and happy holidays!
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