Avoid going overboard this Christmas with these great tips on how to control your holiday spending.
With Christmas fast approaching, there’s so much to look forward to – time off work, getting together with loved ones, taking a holiday and the joy of unwrapping presents. But one thing none of us enjoy is the financial hangover that seems to follow all that festive good cheer.
From buying up big on gifts to booking expensive family holidays, it’s easy to go overboard around Christmas and leave a big dent in your bank balance. Here’s a selection of useful tips to help you manage your holiday spending so that you don’t welcome in the new year with a massive credit card bill weighing on your shoulders.
How much do Australians spend at Christmas?
The 2016 finder.com.au Christmas Debt Survey found that Australians will spend a whopping $9.77 billion on Christmas gifts this year, up $2.2 billion on last year.
The survey asked 2,005 Australians how much they are planning to spend on gifts. The results showed that on average, Australians will spend $539, a substantial rise from $419 in 2015. NSW shoppers are expected to lead the charge and spend $607 each, followed by West Australians spending on average $575.
ASIC’s December 2014 MoneySmart poll examined how people pay for their Christmas presents:
- 60% used their savings
- 20% used credit cards
- 10% borrowed money from family and friends, or used their bonus or tax refund
- 10% purchased items using lay-by
Make a budget and stick to it
Making a budget sounds so boring it almost seems against the spirit of Christmas, but sitting down to crunch the numbers will help you in the long run. Consider how much cash you have to spare on gifts for friends and family. If you’re planning to use a credit card, work out how long it will take you to pay off the amount you want to spend.
As well as an overall budget, plan how much you will spend on each person. Once you know how much money you’ve got to play with, you can start looking for suitable gift ideas.
Make a list (and check it twice).
Having a plan before you hit the shops can help you keep more money in your pocket, especially if you’re an impulse buyer. Put together a list of everything you want to buy your loved ones and yourself, and stick to it regardless of the temptation you might encounter. It’s easy to be sucked in by special deals at this time of year and the fear of missing out is a powerful motivator, but try to stick to your guns and only buy the items on your list.
Research your purchases
When you know what you want to get, you can start researching all your purchases online. Which stores offer the best deals on the items you want? Can you save money by buying online instead of in-store? You might also be able to find discount coupons and promo codes to slash a few extra dollars off the bill.
Use the right credit card
Keep an eye out for special offers from banks and credit card providers to help cover the cost of your Christmas spending. If you are using a credit card, take advantage of interest-free days to help pay off your debt. You can also use your holiday spending to help build a balance of rewards points, plus enjoy the added peace of mind provided by price protection coverage.
You can also keep an eye out for the benefits provided by cash back credit cards. These cards usually offer either a percentage of your total spend as cash back at the end of each month, or a one-off cash back payment as part of a special promotion to entice new customers.
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Get help from your bank
Some banks also offer incentives to new customers that can help maximise your Christmas budget. For example, if you open a new ANZ Access Advantage Account on finder.com.au before 18 December 2016, you will receive a new Visa debit card*. If you use the card three times before 8 January 2017, you will receive a $100 shopping voucher to use at your choice of the following stores: Myer, David Jones, Flight Centre, Woolworths, JB HiFi, Coles or Kmart.
Another option is to sign up for an ING Orange Everyday Account. If you deposit at least $1,000 per month, you will receive a one-off $75 cash bonus – which would certainly come in handy with Christmas just around the corner. The offer is available to the first 6,000 applicants and ends 25 December 2016*.
Avoid online tricks
Most people are aware of some of the tricks bricks-and-mortar stores use to entice us to spend more, but are you savvy with the sneaky tactics online merchants use to encourage you to run up a bigger bill?
Perhaps the most common trick is the minimum-dollar limit if you want to access free shipping, prompting you to spend more than you originally planned just to save a few bucks on the price of delivery. To get around this, plan a big shop in advance so you can get free shipping without making impulse purchases, or keep an eye out for discount coupons offering free shipping.
There are plenty of other ways online retailers encourage you to spend, including:
- Saving your address and credit card details so you can make one-click purchases
- Sending emails and newsletters with special offers and promo codes
- Recommending complementary products that might go with something already in your cart
- Targeting you with ads of products you’ve recently browsed
- Offering free returns
The way to resist the pull of these tricks is simply to use common sense. Unsubscribe from newsletters, delete your details from the retailer’s payment system, stick to your budget, don’t make impulse purchases, and familiarise yourself with a store’s returns process before you buy.
Use cashback sites
If you’re planning to do a lot of your holiday shopping online, cashback sites like Cashback Club, PricePal, Cashrewards and Qwibble can help you get much better value for money. When you purchase anything via one of these websites, a portion of the commission that the retailer pays to the cashback website for sending customers its way, will instead go to you.
For example, at the time of writing, Cashback Club was offering cashback of up to 7.69% on holiday bookings with Expedia, up to 16% on clothing from The Iconic, and up to 12% on purchases from Marks & Spencer*. Offers change regularly and differ between cashback websites, so shop around and check out what deals are available.
Join store loyalty programs
It’s also a good idea to join loyalty programs run by your favourite stores. These usually entitle you to a regular discount store-wide, as well as special member offers and deals whenever they arise. You’ll also be added to the store’s member newsletter so you can be notified of any sales or new stock. Just remember to control the urge to make impulse purchases.
Sign up for mobile banking alerts
Many Australian banks offer an alert service if your account balance dips below a specified level. Signing up for this service can help ensure that your bank account stays in reasonable shape during the holiday period. Once you’ve registered, you’ll receive a text message letting you know your balance is getting low, reminding you it’s time to end your shopping spree.
Beware of overdraft fees
Check with your bank to find out the terms and conditions surrounding account overdrafts. If you use your debit card to make a purchase which pushes your balance below zero, you could be slugged with a hefty fee. If possible, change your account so that purchases that take your balance into the negative will not be approved by your bank.
Don't get caught out by overdrawn fees
The final piece of advice when managing your holiday spending is to always remember the importance of planning ahead. When it comes to Christmas lunch or dinner or entertaining on Boxing Day, stock up on any non-perishable items well in advance to take advantage of specials. If you’re travelling, book several months ahead of time to find the best deals. Even filling up on petrol as far out from Christmas as possible can save you money.
Finally, remember to relax and enjoy yourself, safe in the knowledge that you won’t be waking up with a debt hangover in 2017.
*The deals and offers in this article were correct at the time of publication and may have changed or expired. Always check with the provider for current deal conditions.