In December 2015 alone, Australians spent $24.8 billion on retail purchases, according to The Australian Bureau of Statistics1. It’s no surprise that Christmas is the time of the year when people overspend and start the New Year in debt. Recent research shows that less than half of Australians manage to set and stick to a Christmas budget2, emphasising how important it is to know how to spend and save wisely. David Rankin, award-winning bank manager and founder of Sort My Money, shares his top five tips on how to spend this Christmas season and still save.
1. Allocate money in advance
“Even though Christmas is an annual event, many people don’t prepare themselves financially in the lead up to December. It is actually the perfect time to create a personal budget. Allocating money in advance is a great way to prevent finances from going into the red during one of the most expensive times of year. Before deciding on the amount of money for Christmas spending and gift buying, put together a comprehensive budget and cash flow forecast as this will help determine the final figure. In the budget, include all additional expenses such as food, drinks and socialising. For parents, sticking to one main present per child is a good way to prevent overspending. Another way to save money is allowing relatives to take care of the stocking fillers. If you haven’t set yourself an allowance for Christmas this year, you can always do so for next – as part of a New Year’s budget.”
2. Take advantage of online shopping
“Get in early and make online bargains part of your Christmas shopping mix. Researching gifts and comparing prices to find the best deals is the golden rule of any savvy shopper. The convenience of online shopping makes that rule easy to stick to. Ideally, place orders weeks in advance as domestic delivery cut-off dates are around 10 days before Christmas. Completing payments with debit cards rather than credit cards avoids the risk of being hit by a seasonal spending surcharge – in the form of unwanted interest payments in the New Year. A great way to make sure you stay within the Christmas budget you have set is by keeping an ongoing tally of your spending.”
3. Don’t underestimate Kris Kringle
“If your family still spends up big at Christmas, it’s time to introduce them to the delights of Kris Kringle. Not only does it have an element of surprise, but it also helps to considerably reduce the cost of gifts for everyone. Kris Kringle involves buying one significant gift of meaning for one person, rather than lots of little ‘obligatory’ presents that people either don’t need or don’t want.”
4. Set up a savings plan
“Thanks to the online era, putting in place a savings plan is easier than ever. $20 per week might not seem like a lot. A set-and- forget periodic payment of this amount in your internet banking, though, will give you $1,000 to spend on Christmas this time next year. This proves the old adage that little and often really does fill the purse or wallet.”
5. Find out what others want
“When present buying feels onerous, we tend to over purchase in order to relieve ourselves of the obligation. Bringing the focus back to the other person by finding out (directly or otherwise) what they actually want helps avoid costly speculative spending. Alternatively, gift vouchers can also be great presents to give as Christmas is always followed by the sales period, with most retailers starting their sales on Boxing Day. Ensure the recipient is aware of the expiry date so it can be redeemed within the set timeframe.”
ABOUT THE EXPERT
Sort My Money is an award-winning personal budgeting service. David Rankin founded the company after seeing a niche in the market for a financial coaching service that really understood how to manage day-to- day finances in the long term. The company’s team of financial coaches draws up and manages an optimised personal budget for clients on a daily basis. Sort My Money charges no establishment fee and has a user-friendly week-by- week agreement after an initial consultation.
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