How to Create and Stick to a Budget This Holiday Season

How to Create and Stick to a Budget This Holiday Season

The holiday season is the perfect time of year to wind down, catch up with friends and family, and spread cheer by giving meaningful gifts. And while this year looks to be no different, there are challenges ahead.

Let’s glance at the Australian economy: the current interest rate is 2.85% (compared to 0.35% back in May 2022), the average price of petrol is $1.76/L (which saw massive price fluctuations this year due to supply issues caused by the Russian invasion of Ukraine), and the current cash rate target is 2.85% (an overall inflation rate of 7.3%) which has led to a knock-on effect of higher grocery prices.

How could these factors impact the holiday season? According to the 2022 Festive Season Expectations Survey Research by Sitecore, 1 in 5 Australians plan to spend less on Christmas gifts this year than last. More worryingly, a third of Gen Z’s plan to make all kinds of concessions over the holidays, such as use Buy Now, Pay Later (BNPL) apps for gifts, cancel subscription services, regift unwanted presents, and even sell personal possessions.

Based on these findings, there is a real risk that many Australians will: 1) Spend above their means, or 2) make huge sacrifices to keep the festive spirit alive. The good news is that it doesn’t have to be this way. Here are some useful ways to control your spending without putting a damper on Christmas this year.

Key Takeaways

  • According to the average Australian adult spends $893 on Christmas per year.
  • More than one in three Australians racked up Christmas credit card debt in 2020, with many still paying off those debts well into 2021.
  • Early predictions show that Australians are expected to spend $63.9 billion in the pre-Christmas sales period in 2022.
  • With the easing of global border restrictions, interstate and overseas travel is going to be on the cards for many Australians this Christmas.

Set spending limits on gifts

Write down a list of people you are most likely to buy gifts for. Break them down into categories, such as your partner, children, immediate family, friends, colleagues, and distant relatives. As a rule of thumb, you will probably spend more on those closest to you, but there are exceptions. External factors, such as social pressure from friends and family, can cause us to spend more on people than what we would prefer, just to keep the peace and avoid personal embarrassment.

To avoid this problem, reach out to your different groups and get a feel for what the approach to gift-giving will be this year. Try to establish a firm but fair spending limit, one that makes everyone happy and suits your budget, even if it means advocating for a lower-than-usual price ceiling. After all, caving in is not worth the price of financial anguish.

Take advantage of online and instore sales

The lead up to Christmas is ripe with massive sales events. The two most prominent ones are Black Friday and Cyber Monday, which take place on 25 November and 28 November this year.

Pretty much every retailer hosts these events. They offer discounts on products from a wide range of categories, such as fashion, technology, home & lifestyle, health & beauty, automotive, and many more. These discounts apply to popular and lesser-known brands as well. So, if you have a specific gift in mind for a certain person, you may be able to get it without opting for the most expensive brand.

Best of all? Many retailers have kick-started their sales events early this year, so you can avoid the mad rush if you get in early. And they last throughout most of late November to December, giving you time even if you miss the initial launch.

Budget for food, travel, decorations, and more

Obviously, there is more to Christmas than just buying gifts. People spend a lot of time, money, and effort on planning family gatherings, sprucing up the home, traveling long distances, and buying enough groceries to feed an army.

These expenses add up quickly, so it’s worth planning now. Take the time to prepare a budget, one that considers every purchase you plan to make, such as essentials like utility bills and groceries, to more holiday-specific items like presents, flights, fuel, alcohol, and eating or drinking out.

Unsure how much to budget for each item? Here is a trick: open your relevant banking app and check your Q4 statement from 2021. This will give you an idea on how much you spent, and what you spent it on, in the lead up to Christmas last year. While prices are a bit higher this time around, you can still use last year’s statements as a reference. Doing so will give you enough wiggle room to create fair estimates for today.

Manage your existing debts

Do you have one or more personal debts worth over $8K to contend with this Christmas? Whether it be unpaid utility bills, a personal loan, or credit card debt, juggling debt and maintaining a healthy standard of living can be tough during Christmas.

For this reason, if you are concerned about debt, uncertain about your financial future, and need advice on how to move forward, reach out for help. When you speak to a debt consolidation expert, they can assess your current financial circumstances, which includes your current debt amount, income, and expenses. They can then propose a custom strategy to help get your debt under control.

For instance, a debt expert may be able to reduce the amount of interest on your credit card debt. There are a range of options depending on your personal situation which could help combine multiple debts into one regular payment, reduce the amount of interest you’re paying on credit cards, or even get 0% interest for a period of time while you get your finances back on track.

There are many potential debt solutions and based on your circumstances, our team can help you find the right one. For free, confidential financial advice, speak to a debt consolidation expert for clarity.

Wrapping Up

While Christmas can be both a time to celebrate and enjoy the good times it can also be fraught with financial pressure.

That is why it is important to prioritise your finances now, so that you don’t lose control later. Come up with fixed, realistic budgets that consider all the things you plan to spend on Christmas this year. And when it comes to buying gifts for friends and family, don’t be afraid to set hard spending limits even if such a practice is out of step with previous year.

Things are a bit different now, and that’s okay. Get your Christmas and money plans in order, and you’re bound to start the new year on a stronger financial foot.