How to be Financially Savvy this Christmas

No one could have predicted 2020, but what we do know is that Christmas will be on the 25th of December.

However, there’s no denying that we’ve had bigger things to worry about this year than the coming Christmas period, which is bearing down on us faster than a freight train. So, it would make sense if you haven’t even thought about budgeting for the holidays. It’s also possible that this year, you have a lot less money to spend.

When you’re already struggling with debt, spending big at Christmas is the last thing you need. If you’re feeling stressed out by your financial situation, Christmas can be a particularly challenging time. And when anxiety takes hold, you may end up spending even more as a result. Beginning the new year with a mountain of debts to worry about is the last thing you need.

In 2019, it was estimated that the average Aussie household would spend $969 on Christmas. However, 80% of Australians now believe that COVID-19 will have an impact on their personal or household finances. So, if the thought of the shopping frenzy that is coming is making you break out in a cold sweat it’s not too late to make a plan and stick to it.

7 savvy spending (and saving) tips for Christmas

There’s been many a Christmas when I’ve had no plan, randomly wandering aisles hoping I would figure it all out once I’d found the perfect gift. In the end, I spent a lot of money on gifts that no one even wanted.

But with a little forward planning, some smart budgeting, and being clever about the choices we make, we can have a relaxing and fun festive period with friends and family that doesn’t give us a Christmas debt hangover.

 

Tip 1. Just like Santa – make a list and check it twice

 It’s easy to get carried away at Christmas, buying presents as you see them and then panicking at the last minute and buying more.

To prevent this, think about all things you may need to spend money on such as presents, food, social outings and travel. Then set a dollar limit on how much you’re allowing yourself to spend on each category. Don’t forget to check your bank and credit card statements for a reality check of your money situation, in case you need to pull back on your festive spending.

Planning ahead and putting limits on the amount you will spend before you go shopping gives you a better chance of staying within your budget.

 

Tip 2. Think about who has been naughty and nice

So, you know how much you can afford to spend on presents, now make a list of everyone you intend to buy a gift for and set an amount per person. Add it all up. Can you afford it? If not, here are a few options:

  • Consider spending less per person.
  • Review the list of people that you plan to give presents to. Is there anyone you can cut from the Christmas present list? Don’t feel like you need to buy a present for your brother’s best mate’s new COVID-19 girlfriend just because she’ll be at the Christmas lunch.
  • Agree that only children get presents – this is the plan for my family’s Christmas get-together this year.
  • If you have a large group of friends who are celebrating Christmas together, you can all randomly draw a name and only buy 1 present for your assigned person. Not only is playing Secret Santa super fun to guess who bought your gift, but you also save a lot of money by not having to buy a present for everyone. The budget could be $10, $20, $150, it’s up to you! Just make sure you all agree on a budget in advance, and everyone knows to stick to it.

 

Tip 3. Practice those new COVID-19 Iso skills

Did you learn anything new while in lockdown? Dabbled in macrame or candle making or brushed up on your baking skills? If so, you could create some homemade wonders for family and friends this Christmas rather than buying an impersonal present. I know I always appreciate something made with thought, especially for me.

Also, consider exchanging regifted or upcycled gifts this year rather than purchasing new ones. You could challenge your family to a contest. You’d probably be surprised at how many almost brand new or unopened items you have hidden, forgotten, in your cupboards once you start looking. I even managed to find a bottle of Moet in my laundry cupboard, given to me by a client last year, that I regifted to my niece to celebrate her 21st.

 

Tip 4. Don’t be afraid to talk about money

 Your family and friends are likely feeling the pinch this year too. In which case they’re probably suffering the same fears and anxieties about Christmas debt. Consider having a frank conversation with them about what you can both afford.

You may find them relieved to agree to skip gift-giving this year, and instead, pleased to just spend time with you, restrictions allowing. If anything else, the coronavirus pandemic demonstrated the importance of friends and family and social interactions over material possessions.

 

Tip 5. Dig out all your gift cards

In December 2019, finder.com.au estimated that Aussies were sitting on $835 million of unused gift card credit. That’s an average of $187 per person. And don’t forget all those frequent flyer points that we’re unlikely to need for that Europe trip in a hurry. If your gift cards are at the bottom of your desk drawer, or my case in my undie drawer (don’t ask!), it’s time to dig them out and go shopping.

 

Tip 6. Shop the Sales 

Make the most of pre-Christmas sales. Black Friday on the 27 November is a huge sales day. Originally an American custom that thankfully has arrived on Australian shores, you’re probably already seeing the advance notices in your social media feed. If you shop online just make a note of delivery dates and don’t leave it too late.

If you’re not able to spend Christmas with family and friends this year, thanks to closed borders and social restrictions, consider holding out on their present buying to take advantage of the Boxing Day sales.

Just don’t forget to take that list with you when you go shopping.

 

Tip 7. Avoid Buy Now, Pay Later schemes

 Unless you have a plan to place to repay the loan amount within the interest-free period, try to avoid tempting ‘buy now, pay later’ offers from retailers. Otherwise, after the 0% phase ends, you’ll be charged an aggressive interest rate and that gift could end up costing you far more. If you default just once, you end up paying significant penalty charges and it will also harm your credit score.

 

Do you have any tips of your own to share on how to be financially savvy this coming festive season?

B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

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