Financially Frazzled to Fabulous at Christmas

Love it or hate it, Christmas comes once a year, every year.  And while most of us love the holiday period, the financial strain that often comes with the festive season can put a real damper on what should be a fun and restful time.  But hear this, there ARE ways to reduce the financial burden so you can focus on what really matters to you.

Intentional Spending Plan

We know that Christmas can be expensive, but we often don’t actually know how much extra we spend at this time of year.  The first step in taking the stress out of Christmas finances is to get realistic about what your costs during the Christmas period will be:

• Gifts – Not just family, but all those extra little gifts like ones for teachers, sports coaches etc.

• Extra food – There is definitely more snacking with people home all day, and factor in any special meals like your Christmas day feast.

• Travel expenses such as extra petrol – Particularly if you are planning on visiting relatives, doing day trips or going on holiday over this time.

• Alcohol and other entertainment costs.

Set a reasonable budget for each of these areas and for any other costs that you anticipate.  The total amount of your Christmas costs might just shock you, so once you have an idea of the overall cost of Christmas, you may want to re-think a few things and tweak your budget. 

• If your gift budget is giving you nightmares, think about alternatives – some families do a “Secret Santa” with their extended family whereby each person only buys a present for one other family member. 

• Talk with family and friends about scaling back on gift-giving or setting expectations to focus more on the joy of being together. 

• Make Christmas dinner a potluck – this spreads the load financially and practically.

Savings Plan - Start in January

Once you are happy with your Intentional Spending Plan, work out how many paydays you have to save for this and divide the total amount by this number i.e. if your total number is $2,000 and you are paid fortnightly (26 fortnights in a year), divide $2,000 by 26 which equals $77 per pay period.  If this puts too much pressure on your household budget, go back to your Intentional Spending Plan and rework it.  Don’t plan to spend what you know you can’t afford.

Getting your Christmas costs under control actually starts in January!  Set up a special bank account and create an automatic payment so your fortnightly/monthly contribution happens without fail.  The key here is starting in January.

Stick to the plan!

Simple in theory but slightly harder in real life I know, but for example, if you have budgeted $10 for each teacher gift, stick to this – all these little costs add up.  Shop throughout the year to take advantage of sales and avoid last-minute rush buys.  Think through your purchases well in advance and record your spending as you go – this will help you for next year’s Intentional Spending Plan.

By taking the time to get realistic about your costs (and intentionally re-working these if required), and saving regularly throughout the year, you can march into the Christmas period feeling calm, prepared, and ready for anything.

Kim