Giving is something we all love to do, especially when we’re filled with the magic of Christmas. It’s very easy to spend now and pay later when it comes to spoiling our loved ones. If you’re anything like me, once the sparkle of December fades, a massive debt hangover sets in. Christmas budgeting is a must if you want to start next year in a healthier financial position. It doesn’t have to impact what you do for the rest of the year. It will, however, make a big difference once the jolly man in red heads back to the North Pole!
Plan now
Whether you celebrate Christmas with a big family or a small one, the first step is working out what you normally spend and what you can afford. Make a list of all the people you buy gifts for, allocate a budget to each, and tally up your gift expense. Look at ways you can spend less, like only focusing on kids, Secret Santa, or handmade gift ideas. Buying things on sale, or in advance, can also help ease the burden. When it comes to all the fun stuff, like food, alcohol, work parties, going out, and entertaining, make sure you create a budget for these as well. If you plan now, it will be easier for you to know your limits during the festive season.
Set up a Christmas account
One of the best things we’ve done is set up a Christmas account. Funds are automatically transferred from our offset account each week. We simply worked out what we’re comfortable spending on gifts and divided it up by the weeks left until the end of November. We don’t notice this in our day-to-day, and it will be sitting there ready to use for when we need it.
Gold coin jar or funbox
Our kids came up with this idea, and so far it’s been working well. In our house, we call it the funbox. It’s an awesome way for the kids to appreciate how much things cost and to be included in the family fun time. You can use this idea for just about anything. Things like going out for dinner, bowling, the zoo, or even to the movies. It stops our family from spending money that we now put away for Christmas and holidays. I’ve heard this also works well with five-dollar notes.
Reward programs
Entertaining during the festive season quickly adds up, especially when it’s at your house. I’ve found the supermarket reward programs completely take the burden off the big Christmas food shop. The key to making the most of these programs is using the in-app offers and only shopping for what you normally buy. You receive points when you shop, which convert to dollars. However, you won’t save anything if you’re spending more just to earn points. .
Purchase prepaid cards
Some of us find it hard to have cash lying around, so purchasing prepaid cards can help you save differently. You can’t grab $20 from the piggy bank if it’s been swapped to a card. Just keep in mind card expiry dates and fees. Some are better than others. This might be a great way for you to save for your ‘fun expenses’. If you give gift cards like this for Christmas presents, then pick them up throughout the year. This will help spread the cost over many months.
Reward credit cards
I’ve never been big on the concept of credit cards giving you a reward, but it really does depend on how you look at it. If you swap your credit balance for no interest and gain $400 in eGift cards, then it might just be a good move!
My tip is if you don’t have the money don’t purchase it on credit! The best way to build up points fast is to pay for everything you would with cash/savings on the card and set up a monthly automated sweep of your credit card from your savings account. Even better, if you have a home loan with a 100% offset account. Have your income paid into the offset and use that account to sweep clear the credit card each month. This way you are using the banks money whilst reducing your home loan interest and reducing your loan term. Note this method is not for those who can’t control their spending. Nick – Financial Advisor
