The run up to Christmas and the summer holidays is here. No need to panic – although it’s almost the end of the year there’s still plenty of time to sort out your finances for the pre-Christmas rush.
Making time to think through Christmas expenses now could pay dividends after the tinsel is taken down. Here are seven easy steps to avoid that awful post-Christmas spending hangover.
1. Draw up a plan
Cameron McAusland, Principal Financial Adviser of MLC Advice Randwick, says all too often people fail to plan for their extra expenses over the holiday season, which invariably leads to spending blowouts.
“People end up spending on their credit card rather than using cash in a ‘buy now and pay later mentality’,” he explains.
This year, prepare an itemised budget instead of throwing your hands in the air and spending wildly as you approach the holidays. The budget should include gifts, food, entertainment costs, new clothes, travel expenses – everything we spend money on over the holidays. Include a buffer amount in the budget to cover unexpected expenses that will inevitably arise.
Renee Hush, Principal Financial Adviser of MLC Advice Parramatta agrees it’s never a good idea to go into debt to pay for Christmas costs. “And don’t get caught up in advertising around Christmas and early season sales.”
She also recommends downloading Christmas expense apps to track your spending.
2. Get ready early
It’s a lovely time of year but Christmas can also be stressful. Getting organised now is a great way to take some pressure out of the season.
Cameron says the earlier you start planning the better. ”Allocating a portion of your income to a holiday season kitty can help cover unforeseen costs at the start of the year.”
3. Set limits on your spending and stick to them
If you have spent up to your budgeted limit and also used your buffer you might have to come to terms with cutting out some expenses so you don’t end up increasing your unproductive debts.
Or wait until the January sales to make certain summer purchases to cut down your costs. Those beach towels can be expensive.
4. Start a Christmas club account
There is a range of Christmas club savings accounts and programs that reward members with additional interest on savings or bonus offers over the year.
Renee explains some programs offer contributions back as gift cards in November. For instance members may receive an additional 10 per cent of their contributions over the year as extra gift cards. So if you save $1,000 you receive an extra $100 as a gift card, which can really come in handy at Christmas.
5. Set up a regular Christmas direct deposit and you won’t miss the funds
An alternative to joining a Christmas club is to set up a special Christmas savings account and organise for a direct deposit from your regular account into this account.
Put aside $50 a week and you’ll have $2600 in your Christmas account at the end of the year. Put aside $100 each week and you’ll have a tidy $5200 in your Christmas coffer fund.
6. Have a frugal rather than extravagant mindset
Says Renee: “Keep an eye out for specials and sales. Start buying early and stockpile. Buy one or two Christmas items each week from September or October in your regular shopping such as wrapping paper and non-perishable food items. This will only add an additional few dollars to your shop and by December you should have a lot of shopping done.”
If a store has lay-by look at that as an option. This allows you to pay items off over time and saves on storage and hiding gifts from the kids.
7. Introduce Secret Santa
This is a particularly good idea for big families, where present buying can get really expensive.
If you have 10 adults in your family, instead of spending $50 on each, agree each person will only buy one other person a present, of a decent value, of their choosing. Renee recommends setting a limit of about $250 for the Secret Santa gift.
That way you save money but the person also gets a great gift rather than a lot of small ones they may not use.
This article contains general information only and is not financial product advice. The information does not take into account your investment objectives, financial situation or needs. Before acting on any information on this video you should consider or seek advice on whether the information is appropriate for your needs, financial situation and investment objectives. GWM Adviser Services Limited ABN 96 002 071 749, AFSL No 230692 (“GWMAS”) trading as MLC Advice is a wholly owned subsidiary of the National Australia Bank Limited (“NAB”), and part of the wealth management business of the NAB group of companies (“NAB Group”). GWMAS is associated and may provide financial product advice on or deal in financial products issued by other members of the NAB Group. NAB does not guarantee or otherwise accept any liability in respect of the financial advice or services provided by GWMAS or its authorised representatives. An investment with MLC is not a deposit or liability of, and is not guaranteed by, NAB.