A financial expert’s guide to reining in Christmas spending

As another year of pandemic lockdowns and social distancing draws to a close, we’re all looking forward to reuniting with friends and family over the holiday season. But between the parties, presents and road trips, Christmas can quickly become prohibitively expensive.

Financial expert Kate Campbell, founder and editor of How To Money, shares her insights into how to rein in your Christmas spending without skimping on the festive fun.

PSA: Your family don’t want you to go into debt for them at Christmas time.Credit:iStock

Make a budget. List all the essential costs associated with Christmas – everything from the tree to the trifle – and resist the temptation to overspend or spend money on extras. Who really needs bon-bons anyway?!

Avoid debt. If you want to improve your financial health in 2022, accumulating debt via a credit card or a buy now pay later platform during the festive season is going to get in the way of achieving your goal. “It might feel good to have those gifts on the day,” says Campbell, but it becomes problematic “when you’re spending the next two years paying off that debt.” Rather than spending more than you can afford, Campbell suggests being frank about your financial position with your family. “Be open and honest,” she says. “Say, ‘hey, I’m not in a position to buy everyone a present this year – can we go out for a picnic instead?’” After all, she says, “your family don’t want you to go into debt for them at Christmas time.”

Cut down on gifting. If your family exchanges gifts, make it a Secret Santa with a cap – $50 or $100 – so you’re not buying gifts for long lost aunts and uncles and all their kids. “Everyone only has to buy one gift, and you can buy something that person would love,” says Campbell, who suggests talking to them about what they want rather than buying something that will be of no use to them.

Do away with stocking stuffers. According to research commissioned by ING, Australians received an estimated 10 million unwanted Christmas gifts in 2018. We all have enough stuff in our lives without adding gifts for gifts’ sake to the mix.

Consider secondhand. Platforms like Gumtree or Facebook Marketplace are a great place to find big-ticket items like kids’ bikes or lightly used baby toys for much less than you’d pay new. These platforms are also the place to sell good quality items you no longer need, freeing up extra cash for Christmas. “Regifting excess lockdown purchases” and “looking at op-shops are great ways to find low-cost gifts,” adds Campbell. “You still have that experience of wrapping something up and putting it under the tree but spend less money.”

Embrace handmade. Christmas is the season of giving, not spending. Give beribboned jars of jam or chutney to your kids’ daycare teachers, or bake a batch of gingerbread for your neighbours. And forget the fancy wrapping paper – if you have kids, making your own Christmas wrap doubles as a fun festive activity. All you need is some butchers’ paper, paints and a couple of potatoes to make DIY stamps.

Host a potluck Christmas dinner. Catering for a crowd of 20 is an expensive – and time-consuming – undertaking. Share the load and ask your guests to bring a dish.

Start planning for next Christmas now.

Come the festive season, “there are a lot of additional costs we don’t think about on top of the gifts – extra outings and family activities, Christmas decorations and food,” says Campbell. Starting your Christmas saving early will take the sting out of next year’s outlay. Direct debit is your friend here. Make it a new year resolution to open a separate savings account and set up a regular contribution plan. Put aside a fixed amount each payday, whether it’s $20, $50 or more, for Christmas spending. Give the account a name – ‘Christmas 2022’ – to give it a clear purpose, says Campbell, who suggests writing down your goal: “I want to save $500 by December next year, and I’m going to do that by having a separate account that I automatically transfer $50 or $100 into each month when I get paid.”

To determine how much you need to save, “look at how much you spend this Christmas,” says Campbell. “Make a plan and incorporate that into your goal-setting in the new year.” Your Christmas savings will reduce your reliance on high-interest credit cards or accumulating debt via buy now pay later platforms. By the time the festive season rolls around again, “you can spend without as much anxiety,” says Campbell.

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