10 December 2019

Top tips for you to save this Christmas

Troy MacMillian sat down with the West to share his tips on how to enjoy the holiday season without emptying your bank account. 

Question 1: Can you give us your top 5 tips on how to enjoy the holiday season without emptying your bank account?

1. Plan for Christmas

“Most people don’t plan to fail, they fail to plan.” ― John L. Beckley.

When it comes to Christmas, some simple planning goes a long way to ensure your festive season is enjoyed without any associated financial pain. Planning should include:

  • Make a shopping list. Start the process by writing down the list of people you plan on buying gifts for this year. This is the time to consider who should be on your gift list and who doesn’t make the cut! Start with your immediate family and close friends, and selectively add to your list from there.
  • Set a spending limit. It’s easy to overspend on Christmas gifts by letting your emotions get the better of you. Therefore, it helps to figure out the total amount of money you want to spend on presents, and then divide this figure up amongst each person on your list. As an example, if you decide to spend $600 on presents this year, you might choose to allocate $300 for your children, $150 for your spouse, $50 for your parents, and so on. 
  • Create a Christmas savings account. It’s difficult to keep track of your Christmas spending and to know how much you must spend on presents if you have only one account where all your expenses and income comes from. A separate savings account just for Christmas expenses will give you a clear idea about how much money you have available for spending.

2. Use a Christmas budgeting app

To keep on track with your spending over Christmas, there are number of apps on your phone that can help such as ASIC’s MoneySmart TrackMySPEND.

3. Buy and sell in the secondhand economy

Instead of buying new gifts for everyone on your list and spending big on decorations, consider shopping around on sites like Gumtree and eBay or local second hand stores as you may be surprised by what you find.

To fund these purchases, you could also look to sell any unwanted or unused items from home. These items could even include Christmas gifts from last year that were never used or have just become unloved over the year.

4. Avoid using credit cards

The easy option this Christmas is to charge all expenses on your credit card, but it can come back to hurt you. If you do not repay the amount owing by the end of the month, then you will have to start paying interest at very high rates. Then if you continue to only meet the minimum repayment, you could be repaying the credit card for many Christmas periods to come.

5. Organise your bills

Getting organised and paying your bills that are due around Christmas early means that you will know exactly how much money you have leftover to spend on Christmas shopping.

Then once the Christmas bare necessities are bought, try and arrange to pay all your bills that are going to fall due in January as well. This will reduce the stress or non-payment, keep your credit rating clear, and give you a much better idea of what you can truly afford to spend on any “extras”.

If you know that you’re going to run short, then get on the front foot to phone the bill issuer to try and negotiate a payment plan.

Question 2: What are some of the ways you personally save money during the silly season?

I’m a big fan of the on-line app – Raiz as it allows me to save very easily throughout the year for such events. On the app, you can set up the goal to save a certain amount for Christmas and then arrange for a daily dollar amount to be debited from your bank account and invested into investments of your choice on the app like cash, shares and property.

There is also an additional feature of ‘rounding up’ all your purchases so that small amounts also get invested consistently over time, the combined result of helping you achieve your target.

You can track your progress over the year and change the daily amount that you’re investing to ensure that you have the best chance of achieving your goal.

Typically, you don’t even notice the amounts coming out and like all good savings plans, you simply adjust your spending habits after your investments have been paid.

Question 3: Many people equate going all out financially as a must for having a great holiday season – how detrimental is this to one’s finances?

Financial decisions that we make in preparation for Christmas and the holiday season tend to have an impact that extends far beyond this period. 

If you overextend, it can have an impact financially that will make it more difficult to plan and save in the year ahead. If the finances have been really stretched, then there’s the additional emotional impact on relationships and family. 

It’s a sad fact that following the festive season each year are a rush of divorces, with many couples splitting by the first working day in January. 

Question 4: Besides gifts, are there some surprise money-drainers that people need to keep an eye on?

Instead of jetting off to Bali or having an expensive ski trip to Japan, to save money this holiday period, plan a closer-to-home holiday that’ll save you loads of money but still be fun.

Camping is one option this summer, and if you’ve already got a tent and most of the necessary camping gear, it’ll just cost you a bit of petrol and camping fees. It’s important to note though that camping spots down south and further up north of our state fill up rapidly at Christmas time, so book well in advance so you don’t miss out.

Question 5: Most of us set a budget, but have trouble sticking to it when it comes to loved ones, what is your best advice there?

3 steps to your Christmas Budget

  1. Don’t exceed it. Without a plan it is easy to fall into the compulsive buying trap that’s driven by our emotions during this period. 
  2. Use an app. Once you have created the budget then the best chance that you have of sticking to it is to use a money management app (mentioned above) to track all your spending in the lead-up.

Prioritise. You need to work out what’s most important and then allocate your spending accordingly. If you have Christmas-related costs that are not negotiable (an accommodation booking, for example, or Christmas food you’ve promised to make), buy them before you spend your money on anything else. That way you can cut back