Despite reports that Christmas spending was sluggish in 2018, market research company Roy Morgan reported Australians still managed to spend $51.4billion at the tills during pre-Christmas sales. Post-Christmas spending was $18.3 billion. That’s a lot of turkey and toys.
MoneySmart, the online financial service run by ASIC, revealed that while Australians planned to spend around $955 on Christmas, their credit card bills told a different story – with the average person spending $1,666 by the end of the silly season. Which is why it’s important to budget for Christmas now. You know that once the excitement of Christmas passes and the harsh reality of any overzealous spending sets in, you’re in the doldrums of debt and weeping over another year started on the wrong foot. The good news is you can take steps now to make sure looking at your bank balance doesn’t add to your post-Christmas blues.
Here are a few tips to help get your budgeting on track for the festive season now.
Calculate your cash flow and prioritise
Before you can budget effectively, it’s important to calculate your income and expenditure. Most banks offer statements in Excel spreadsheet or CSV format for download. Take a look at the last four months’ statements to see what you’ve spent and where your money goes. When you see it in black and white, it’s easier to figure out where you can save and which payments you need to prioritise – like mortgage/rent, utilities and grocery shopping.
Plan and budget
For the next few months, set out a workable budget that will see you through until Christmas. Decide which expenses you could cut completely and which you can’t. Maybe you’ve been invited to a fancy night out that requires you to buy a new outfit. Ditch that night and stay indoors to save a heap of cash instead. Send your Christmas cards online this year, or buy your wrapping paper in bulk to save a few bob. Alternatively, download a budgeting app for your smartphone that will help you save exactly what you need for each present. Better still, cull your present list completely.
Did you know?
Australians use more than 150,000km of wrapping paper during Christmas – enough to wrap around the Earth’s equator nearly four times.
Start your own Christmas Club
With two months to go until Christmas, you’ve still got time to build a Christmas Club account, although not in the traditional sense through a third party. Open a separate savings account and call it a Christmas Club so you’re not tempted to use the money for anything else.
Once you’ve worked out your budget and know exactly how much you spend every week or month you can see the areas where you can trim your spending. If you squirrel away $50 a week – which is probably one takeaway and a few drinks after work – you’ll have a healthy wodge of cash come Christmas. Even $100 a month means you’ll have enough to buy a few token pressies and a nice festive spread.
There are a number of money-saving apps available for smartphones where you can siphon money from your main checking account into a savings pot, which makes saving even easier. And once Christmas is over, why not start a Christmas savings account for 2020 straight away so you know you’ll be a step ahead of yourself for next year?
Did you know?
12% of Australians nominated some kind of financial windfall as what they wanted most for Christmas, while 10% were just after a good time with their family and friends.
Track your spending
Like money-savings apps and budgeting tools, there is a plethora of apps available that can help track your spending so you don’t blow your budget. Many banks, too, have inbuilt tracking systems to help keep you within your own set spending limits. Check out the new 86400 bank, which we recently reviewed. It’s one of the upcoming neobanks we expect to see more of in the market. These banking apps have personal finance at the heart of their business and are competing with traditional banks to offer customers a holistic financial experience.
If keeping track via smartphone is not your deal, there’s always the tried and tested pen and paper method. Jot down everything you spend in a notebook. Or whip up a spreadsheet yourself if that’s more your thing. Whichever way you record your outgoings, as long as you do it, it’s less likely you’ll overspend.
Did you know?
7 million Australians don’t bother to track their expenses over the Christmas period. 43% of Aussies won’t even have a budget.
Boost your income
In the run-up to the festive period few people are able to find extra time in their diary. However, if you really want to make sure you’re set for Christmas, see if there is any way you can squeeze in some extra work. Ask if there is any overtime available. If you’re not already working full-time, offer to work an extra day a week to help with the inevitable busy period before companies shut down for the holidays, or see if there are any businesses in your area that need extra staff in the evening.
If it’s not possible for you to leave home for extra work due to family commitments, turn to the internet to see where you can make a quick buck. Dig out clothes, toys or other household items you think others may be looking to buy at Christmas and put them up for sale on eBay or Gumtree. After all, one person’s trash is another’s treasure.
Did you know?
Sustainability is going to be really important for consumers this year as people shun predominantly plastic presents.
Get a credit card now, if you haven’t already got one
If you sign up and start spending now, you won’t have to make your first payment for two months. Save for a couple of months then use those savings to pay off your credit card and gather points or miles at the same time as doing your Christmas shopping. Keep putting your money away every week/month/fortnight so you’re able to pay off your card in full. There’s no point getting a card and not being able to pay if off or you’ll just end up in debt after Christmas, which is what you want to avoid if you can.
When choosing a card for Christmas spending, make sure you have a look at the interest rate on purchases; some of them carry a very high rate. If for some reason you’re unable to pay off your card in full, at least you won’t be lumped with massive charges on top of the balance if you choose a low interest card.
Receive up to 120,000 bonus Qantas Points!
Receive up to 120,000 bonus Qantas Points (20,000 points per month for the first 6 months) when you spend at least $1,500 each month.
Reduced annual fee of $199 p.a. in the first year ($299 p.a. thereafter).
Enjoy 6 months interest-free on your first purchase of selected Qantas products and services.
2 complimentary Qantas Club lounge invitations per year.
Citigroup Pty Limited ABN 88 004 325 080 AFSL No. 238 098 Australian credit licence 238098, is the Credit Provider and Issuer of the Qantas Premier credit cards on behalf of Qantas Airways Limited ABN 16 009 661 901.
This credit card offer is subject to change and may not be directly related to the content of this article.
Already got a credit card? Transfer your balance to get rewards.
Maybe you’ve had a credit card for a while but still have a balance. Take a look at the 0% balance transfer cards with a set interest-free period, to make good use of any offers before Christmas. If you know you’re going to use your credit card more you may as well swap to one that will give you something back. And if you do opt to change cards before Christmas, make sure you read the fine print for any fees and clear the outstanding balance before the promotional period expires so you’re not paying the higher interest rate when it’s over.
Did you know?
Two million Australians – almost one in ten people – will leave their Christmas shopping until Christmas Eve.
Use cashback websites to get rewarded for your spending
Shopaholics rejoice. Did you know you can get rewarded for your spending? Cashback websites pay you for going through them to spend with their affiliated retailers or providers. The amount of money you get back can range anywhere from 1-30%, but is usually around 5-7% of the sale price. This means if you spend $100 you’ll receive $5-$7 effective discount on the sale. Some sites have a joining fee while others offer a joining bonus, so make sure you read their T&Cs well to see if it’s something that you can work with.
Once you’ve signed up, search through the site to see what deals they’re offering, or if you already have a product in mind you may be able to get a good deal through them. If you learn how to use cashback sites properly, you can save $100s a year.
There is a range of cashback credit cards too. Using these for Christmas spending can help grow your points or airmiles as many are affiliated with an airline. For more information, take a look at our how to earn cashback and rewards points guide.
Keep an eye out for Black Friday and Cyber Monday sales
Yes, the American shopping frenzy that marks the day after Thanksgiving in the United States has come to Australian shores, or rather websites. According to Australia Post, 2018 was the year Australians fully embraced the Black Friday spending spree tradition. Black Friday/Cyber Monday sales recorded the biggest number of purchases on any given sales day in Australia last year with a year-on-year growth of 29%. This means Australians are shopping earlier for Christmas, and that this year retailers will be ready with bigger and better sales. Which is where you get your Christmas shopping bargains. Just remember to stay within your budget! Boring, aren’t we?
Hopefully, we’ve given you some good ideas on how to budget for Christmas. As we’ve revealed, there are a number of canny ways to streamline your spending to help limit any financial anxiety you may have this year. And if you are feeling the pressure, remember it’s only one day. You don’t need to go overboard buying presents for people or making sure you have every delightful goodie from the deli. But having a few tips on how you can keep control of your finances will definitely help make the season a good one.