The holiday season is fast-approaching, which means it’s time to prepare your bank account for the festivities.
Aussies are planning to spend around $17.3 billion this Christmas, which works out to an average of $893 per person. And of that, gifts account for nearly $400, research from Finder.com.au shows.
While that seems like a hefty figure, we all know things can get out of hand pretty quickly around this time of year. They don’t call it the silly season for nothing!
But, by building yourself a holiday budget - and sticking to it - you can ensure you don’t go overboard...and carry a financial hangover into the New Year.
Here are 6 ways to stay on track.
1. Be realistic about your spending limits
Your budget for the holidays consists of whatever your wallet has left over after paying for necessities. That means anything outside of bills, rent or mortgage payments and any debt repayments.
You can use last year’s holiday spending as a guide. If you dipped into credit last year, try and set this year’s spending limit at just your debit card or cash purchases.
2. Anticipate all your costs
You’ve heard the old saying, right? Failing to prepare is preparing to fail. In this case, failing to anticipate all your costs will lead to a failed budget!
Things you can expect to spend money on during the holiday season are:
- Gifts (remember, these are the biggest costs at Christmas)
- Catering or groceries
- School holiday costs (entertainment, care, excursions etc)
- Cards, postage and wrapping paper
While we’re not all friends with spreadsheets, they could be a really useful tool to create your holiday budget. You may want to plot all the above categories into different columns, and use the cells to break them down into individual costs.
For example, under gifts you might want to write out everyone you’ll be buying gifts for, and how much money you’re assigning to each gift. Then, continue breaking down your costs under each category - ensuring you’re staying within your overall spending limit.
If you’ve gone over your spending limit, consider cutting some costs. Can you cut a $40 present to a $30 present? If not, you may want to consider ways you can come up with the funds. For example, try cutting your morning latte, and saving the money instead. Or, try selling a few of your unwanted items around the house via Gumtree or eBay!
3. Shop around
Don’t always buy the first thing you see.
If you like something, plug it into Google and see if you can find it cheaper anywhere else. Or, see if you can find a discount code online.
And remember, there are always sales in the lead up to Christmas (think Black Friday on Friday 26 November, or Cyber Monday on Monday 29 November), so keep abreast of what’s happening. Sign up to emails from your favourite retailers to know what’s happening, and when, so you don’t miss any other promotions.
Hindsight’s always better than foresight, but buying gifts during the Boxing Day or EOFY sales, and saving them until Christmas can be a major cash grab, too.
4. Track your spending
Just like any good budget, tracking your spend is key. Every week, check in with yourself. Are you within your spending limit? Are you over it? Can you cut back elsewhere to ensure you don’t continue to blow out your budget?
5. Get creative
You don’t always need to buy new presents. In fact, an estimated $400 million is spent on 10 million unwanted gifts at Christmas time. That’s a lot of landfill!
Some of the least appreciated gifts are pyjamas, slippers, underwear and socks. So, rather than get something that could end up becoming waste, why not make something?
It could be a Christmas pudding, some home decorations, candles, a marmalade, a DIY hamper...the options are endless.
6. Do a Secret Santa
If you’ve got a big family or a big friendship group, presents can quickly get out of hand. And, like we mentioned, a tonne of gifts end up in the trash at the end of the festivities.
So, it may be worth having a chat to everyone about their expectations this Christmas, and whether they’d consider a Secret Santa, or Kris Kringle. This way, everyone gets a gift, and the costs are drastically reduced - not to mention they’re a fun game to play on Christmas day!
Set yourself up for 2022!
Sticking to your budget means you can continue to pay for your necessities and meet your bill and debt repayments. This means your credit score can stay intact, and you’re not left with that pesky financial hangover in 2022.
If you’re not sure what your credit score is, you can check it for free here at SocietyOne. Our credit score report will provide you with powerful insights, to see how banks and lenders view your score.