Five simple ways to reduce your Christmas spending
Have you prepared your shopping list or bought your Christmas presents yet?
Yes, it’s that time of the year again; the holiday season is smiling upon us, and the air is festive with Christmas cheer. And, going by the findings of a new survey, Australians are all set to splurge big bucks this holiday season, with the projected spending over the festive season expected to hit $59 billion. Young Australians are particularly looking forward to celebrating this year, with 33% of Gen Z planning to spend more than last year during the Christmas season.
A merry Christmas for your wallet
According to a report by Finder, Australians spent more than $24 billion on credit cards during the Christmas period in 2020. While the figure was lower than what it was during the same period in 2019, it indicates a substantial size of borrowing, amounting to an average of $1,748 per card.
While it is natural for most of us to overspend on Christmas, digging too deep into your wallet can lead to an unhappy financial hangover post the holiday season. Here are some smart tips to help you manage your money better this holiday season:
- Have a budget and stick to it
What’s the best way to prevent yourself from splurging?
The answer is as simple as planning your expenses in advance and drawing a budget you are going to follow.
Start by making a list of who you are going to buy presents for, what you would like to get for them, and the maximum amount you can afford to spend on each person.
Next, you prepare a list of the food you are going to serve during the holiday season so that you have an exhaustive grocery list at hand to start picking up items in advance. This will stop you from buying unnecessary items and also pick out what you need at the best possible rates by keeping an eye out for special deals at your local shops.
The same principle applies to holiday travel as well. Even though it may be safer to celebrate at home these days, if you are planning to travel during the holiday season, consider making your bookings in advance to get cheaper deals on flights and accommodation.
- Get creative with your gifts
According to a recent survey, many people are worried about choosing the wrong gift for their loved ones during the festive season.
It can be tricky to get the right gifts for all the important people in your life, but you don’t want to waste your money by giving something they are not going to appreciate. To get around this challenge, perhaps you could consider buying gift cards for your family and friends to make sure you don’t end up buying presents they don’t need.
Alternatively, you could get creative and make some homemade gifts that are not only personalised but also save you money. Think handmade cards, knitted items, scented candles, etc. If you are really low on cash, you could even replace gifts with experiences like a picnic at the beach.
- Search for online discounts and cashback
If you are doing your Christmas shopping online, you can use some of the various cashback sites, such as Cashrewards, Cashback Club, and PricePal, to add to your savings on Christmas through rewards and cashback deals.
It’s also worth checking for shipping costs when shopping online. It’s usually better to shop on sites that offer free delivery or buy online and pick in store to maximise your savings. It’s also important to check the return policy to avoid being stuck with something you don’t need.
- Keep track of your expenses
Supermarkets and online stores are overflowing with attractive deals and products at this time of the year, which can tempt you to go overboard with your budget. Therefore, it is important to track your expenses while you shop so that you know the amount of money you have spent.
You can use an online tracking app, like ASIC’s MoneySmart’s TrackMySPEND app, to set your spending limit for various Christmas expenses and track your expenses while you shop.
- Avoid the Debt Trap
If you don’t have the cash to pay for your Christmas expenses, using a credit card could be a convenient alternative. However, spending too much on your credit card without planning could push you into a debt trap if you are unable to pay your credit card bill in full, and on time. Even if you use a buy now pay later facility that is potentially interest free, you could be hit by late payment fees if you fail to keep up with your repayment schedule. Therefore, it’s advisable to plan your expenses in advance to enjoy the holiday season guilt-free.
A dollar saved is a dollar earned!
The festive season can be costly, and it’s important to prepare accordingly to avoid blowing your household budget. While you cannot totally cut down on holiday spending, it may be possible to save money in other areas, such as refinancing to a cheaper home loan to reduce the size of your monthly repayments.
If you’ve been on the same home loan deal for the past couple of years, take out some time this holiday season to review your home loan and check how your interest rate stacks up against the market average. If you find a lower rate, you can always pick up the phone to negotiate a better deal with your lender or connect with a mortgage broker to find a competitive deal on your home loan.