The holiday season is a time to spread cheer and enjoy with loved ones, but for some, it can also result in financial difficulties in the coming year. Overspending on gifts, parties, and decorations can quickly add up, leaving us with unwanted debts that may linger well into the New Year.
In 2022, Australians spent more than $66.7 billion during the pre-Christmas sales in preparation for the festive season. The rising cost of goods and services mean that even though many are trying to curb their spending, it is expected that we will spend a little extra this year.
5 ways to help reduce Christmas spending
- Create a Christmas budget - A budget is an effective way of controlling spending as it helps you to understand what you would like to spend. List all of the costs you can think of (gifts, decorations, food, travel and entertainment), then set limits for each category and stick to them diligently. Consider using budgeting apps or spreadsheets to track your expenses and ensure you stay on track.
- Embrace the spirit of giving - Instead of buying individual gifts for every family member or friend, organise a Kris Kringle or Secret Santa gift exchange. This not only reduces the financial pressure for everyone, but it adds an element of surprise and excitement to the holiday festivities.
- Take advantage of sales and discounts - Begin your Christmas shopping early to take advantage of sales and discounts. Stockpiling non-perishable food items and other essentials before prices rise closer to Christmas can deliver big savings.
- Online shopping - You can often find better prices by shopping around online and various third-party websites offer cash back or rewards not available in store.
- DIY and personalised gifts - Tap into your creativity by making your own gifts. Handmade gifts can be a welcome and thoughtful way of giving. Consider creating homemade cards, photo albums, or baking treats for loved ones.
Tackle any debt now
With many household budgets feeling the pinch due to our cost of living rising, your debts may already be increasing. If you are feeling held back with debt, don’t decide to leave it until after Christmas. Before it becomes challenging, the time to navigate it is now.
One option to consider is to consolidate your high-interest debts into a single more manageable loan. This approach can simplify repayments and potentially reduce interest rates, making it easier to eliminate debt over time. But it is important to do your calculations carefully to make sure it is worthwhile for you and then to be vigilant about watching spending.
Another option is to take a look at your expenses. Is there something that you can cut back on or so you can divert that money towards repaying debt? Any reduction of your debt load will help, no matter how small. Some people like to implement the snowball method in tackling their debts: while continuing to make the minimum repayments on all your debts you pay a little extra on the smallest debt to pay it off faster. Getting rid of debts can help to inspire you to continue.
Next steps
Taking control of Christmas spending and debt is key for starting the New Year on a positive financial note. So, start planning early, know what you can afford to spend and prioritise your financial wellbeing for a debt-free and stress-free holiday season.
If you are struggling with post-Christmas debt or need assistance to manage your finances, we are here to help. Contact your local Nexia Adviser to discuss strategies to remain in control of your financial future. Make this Christmas season a time of joy and financial empowerment.
