Christmas can be an expensive time of year. There's a lot of pressure to spend big on gifts and entertainment, but getting into debt isn’t the way to go.
The Australian Retailers Association is predicting shoppers will lavish more than $11 billion on presents this Christmas, with each person spending an average of $726. When you include the cost of entertaining at home and going out to parties, it can add up to a hefty hit on your finances.
Here’s how to show you care during the holiday season while also keeping a lid on your spending.
1. Have a plan
Creating a gift shopping list is a great way to get organised. The list should cover all the people you need to buy for, what you want to get them and how much you plan to spend on their gift.
Creating a list will also help keep track of how much you are spending and help prevent impulse purchases.
It’s important to set a budget and stick to it.
If your budget is tight, suggest to friends and family that you organise a Secret Santa. That means you won’t have to buy gifts for everyone, just draw one person’s name instead and focus on giving that person a special gift they’ll really love.
“Want to know the best thing about budgets? It’s not that they restrict your spending – budgets give your money purpose. When you create and enforce a budget, there’s an undertone that you’re managing something really important, something that you CAN get under control,” explains The Remarkable Woman founder Shivani Gopal.
Click here for Shivani's tips on creating a personal finance plan in 45 minutes.
2. Shop smart
According to the Australian Retailers Association, shoppers are turning to the internet in a big way - an average of 48% of Christmas presents are likely to be purchased online this year.
Online shopping is a great way to take the stress out of finding gifts. You can search for inspirations and the best deals from the comfort of your sofa.
However, there are pitfalls to consider. Shipping can add a hefty premium to those purchases. If you do buy online, many stores offer free shipping when your shopping cart reaches a certain dollar amount. Plan your purchases so you can order multiple items at once to take advantage of free or reduced shipping rates.
Also be aware that COVID-19 has put huge pressure on the supply chain. International shipping delays mean some items you were planning to buy may be hard to get or out of stock. Local delivery and postal hold ups are on the cards. Start shopping early and, if sending parcels to friends and relatives, make sure you check the domestic or international cut-off delivery dates so your gift arrives in time for the big day.
Keep an eye out for online promotion codes to save money on purchases and you will also find many retailers offer a discount on your first order when you sign up to their newsletters.
If you prefer to do your shopping in person, Google Shopping is still a great way to compare products and prices online, as are marketplaces and comparison websites. Then you can hit the stores armed with the knowledge of what to get, where to find it and how much you should pay.
3. Be creative
A great way to save money this Christmas is by making homemade gifts – they offer a personal touch that you can’t find in a department store. Think edible items such as cookies, rum balls or jam; a framed photograph or photo album filled with happy memories from the year; or something crafty.
Also consider the gift of time rather than a store-bought item. Create coupons that offer treats such as cooking a meal, washing the car or giving a massage back rub.
Christmas generates a mountain of waste from all the plastic packaging, decorations and wrapping paper. It also involves thousands of air and road kilometres to transport the goods. Handmade gifts are not only a clever way of saving money, but are also a more environmentally friendly way and personal way to give.
4. Be cautious about buy-now-pay-later services
Buy-now-pay-later services such as AfterPay can be a great tool for budgeting. The platforms split a single purchase up into a number of equal instalments paid weekly, fortnightly or monthly.
It means you won’t have to front up the full cost of the item when you first buy it, allowing you to spread the cost of your Christmas spending.
However, the Australian Securities and Investments Commission (ASIC) has found that one in five users of ‘buy now pay later’ services have been late repaying what they owe. This can lead to shoppers paying up to 25% of the purchase price if they miss all the payments
Make sure to keep track of how many purchases you make and stay on top of your repayments to avoid late fees. Also be aware that missing repayments may leave a negative mark on your credit report.
5. Lighten your load on Christmas Day
Christmas entertaining is another area where planning is key. Make a list of what you’ll need and stick to it - festive fever can lead people to buy far more food and drinks than they’ll ever be able to consume.
Purchase as much as you can early. Special promotions and offers at supermarkets are likely to slow down as Christmas comes closer.
And remember, just because you are hosting a festive event doesn’t mean you need to carry the financial burden and workload all by yourself. Asking for help is a healthy way to create boundaries. Ask others to bring nibbles, drinks, salads or desserts.
6. Plan for next year
Having a long-term financial plan that incorporates your spending habits both daily and for special occasions is essential for healthy finances. If you save a little each week, next Christmas will be a lot less stressful and enjoyable.
“If you’re a Signature Member of The Remarkable Woman, use our highly rated budget tool that enables you to fill in your current and proposed budget at the same time with prompts on the common areas we spend our money on, and work through your savings plan as a result,” suggests Shivani.
For more tips from Shivani, visit The 101 of Money Management.
You could also add to your bottom line by having a side hustle. Finder research from 2019 found the average Australian side-hustler earned an additional $7,300 over the course of the year.
One great and easy way to do this is head to one of the many marketplace-style businesses that already exist.
“I’m talking about Fiverr, AirTasker, Uber, Freelancer, and Upwork,” Shivani explains. “These are sites where you can quickly commoditise your skills (whether they are writing, designing, handiwork, delivery, or taking surveys) and turn them into that much-needed income!
“Because you’re working within an existing business structure, you don’t need to worry about setting up your own branding and assets or going out to pitch for new clients. This makes your life super easy. However, be aware that many of these websites and companies will often take a percentage of your sales in order to maintain your listing - so make sure you’re well researched before jumping in.”
Need help creating a budget? We have you covered with our automated budget calculator. Our calculator will allow you to have a bird's view of your finances, be in control and plan for your future. PLUS our money series will help you understand your money story, so you can unpack your relationship with money and shift your mindset for the better! You can also chat to one of our financial mentors. Access all of this by subscribing to our Signature Membership.