Christmas is the perfect time of year to celebrate with friends and family. But the occasion also comes with a wide array of expenses. These include the cost of buying presents, stocking up on food, and staying in accommodation.
Creating and following a budget is an effective way to achieve a debt-free Christmas. It can help you stay in control of your finances, avoid emotional distress, and reduce (or even eliminate) the amount of debt you owe.
In this article, you will learn how to prepare and stick to a Christmas budget. You will also learn how to incorporate debt management into your holiday season planning.
Key Takeaways
- The holiday season comes with a wide array of expenses such as travel and accommodation, groceries, gifts, and pet sitting (if travelling)
- Overspending on gifts and using credit are two of the most common contributors to a debt hangover
- Establishing a budget and performing a credit card balance can help keep your debt and finances under control
Debt Management Tips for Christmas
Below are some effective ways to keep your spending habits and your debt under control this holiday season.
1. Figure out what you can pay for
Creating a budget for Christmas is a vital debt management tool. The holiday season comes with many one-time expenses, which stack on top of your existing obligations. Anticipating those expenses can help keep your spending under control.
First, use a free online budget calculator. Enter details about your income, including your net salary and bonuses, and details about your expenses, including your household, travel, insurance, and leisure expenses.
The results of the budget calculator can help you determine how much money you have left to spend during the holiday season.
If the number is lower than expected, cut back on variable expenses (expenses that change over time). Pause your streaming subscription services for a while. Spend less money on dining out. Or buy home brand ingredients for meals.
2. Avoid Overspending on Gifts
Gift-giving is one of the greatest joys of the Christmas season. However, it’s also a common source of financial anguish. The pressure to spend money on gifts for loved ones can lead to overspending.
Research shows that the average Australian, across all generations – Gen Z, millennials, Gen X, and boomers –, plan to spend about $660 on Christmas gifts this year. Also, 76% of Australians intend to spend the same or more this Christmas compared to last year.
To avoid overspending on gifts, create a list of gift recipients and set a spending limit for each one. Take advantage of sales and discounts – both online and in-store. Consider budget-friendly gift ideas, including personalized crafts. You could also organize a Secret Santa gift exchange among friends and family.
3. Avoid Using Credit, Perform a Credit Card Balance
You may be tempted to use credit to pay for goods and services. But resist the temptation, as doing so could sink you further into debt.
In fact, research shows that over half of Australians who expect to accumulate debt over the holiday season have a credit card, with the vast majority of them having existing debt on their credit card.
If you must use credit over the holiday season, only use it for the things you really need, not for gifts or luxury goods. Also, avoid applying for new credit. It could temporarily hurt your credit score and generate a hard inquiry against your account, even if your application is successful.
You could also perform a credit card balance transfer. This is where you transfer the balance of your existing credit card debt to a new card, one with a low or zero introductory interest period. If you go down this route, ensure you can pay off the majority of your credit card debt before the introductory interest period is over.
4. Be Budget-Friendly About Christmas Lunch
Whether you are hosting or contributing to Christmas lunch this year, the cost of groceries is higher than ever.
Research shows that Australians are spending more on groceries in 2024, with the average shopper spending $168 per week – an increase of 5 per cent compared to last year. What’s more, households with 5 or more occupants have an average weekly grocery bill of $232.
Naturally, the week of Christmas sends grocery bills soaring. So, how do you bring that number down? In the lead up to Christmas, look out for deals on non-perishable goods. These could be dried fruit and nuts, flour, canned books, pasta, and meat (to freeze).
Why buy non-perishable goods in advance? Because it means you’ll have more money to spend on the things that you can only buy near Christmas Day. For example, fresh fruit and vegetables and dairy produce.
5. Seek Independent Debt Help
Debt management and dealing with your finances during the holiday season can be tough. Last year, approximately 38 per cent of Australians were concerned about their finances in December. The same study found that 45 per cent of Australians were expecting to work more during the holiday season due to the cost of living.
If you’re struggling to repay debt and keep up with living costs, talk to an expert. You can call the National Debt Helpline on 1800 007 007 and speak to a financial counsellor about your situation.
You can also speak to the experts at Debt Fix. We listen to your concerns. We propose a debt relief plan tailored to your lifestyle. And we break down your plan into one weekly payment, so you don’t get overwhelmed.
Making an application takes only 30 seconds. And you won’t affect your credit rating.
Speak to Debt Fix Today
Dealing with your finances during Christmas can be emotionally stressful. But it doesn’t have to be. Incorporate the above budgeting tips into your plan so that you can save money and stay in high spirits during the holiday season.
If juggling debt is weighing you down, speak to the people you can trust. Contact Debt Fix today. Get started on your path to financial freedom.
Frequently Asked Questions (FAQ)
How Do You Prepare a Budget for Christmas?
Determine how much money you have coming in and going out. You can do this with an online budget calculator. The results of your calculations will tell you how much money you have left to pay for Christmas-related expenses.
What Common Christmas Expenses Should You Budget For?
Common Christmas expenses to budget for include family meals, presents, decorations, Christmas cards and postage, wrapping paper, travel expenses, and pet sitting (for travel).
Is It Possible to Avoid Debt and Financial Stress During Christmas?
Absolutely. The key is to plan ahead, determine what you can afford to pay for, and stick to your plan. If you’re struggling with debt, speak to a debt relief expert. They can assess your situation and propose a viable debt relief plan.
