Dreaming of a bright Christmas? It’s time to start planning

The festive season is an enjoyable time, but yet can also be stressful for some people, especially when it comes to finances.

The pressures of gift-giving, holidays and parties can cause people to be less vigilant when it comes to spending.

According to ASIC (Australian Securities and Investments Commission), last December 57% of Australians set a budget but one in five couldn’t stick to it.

The stresses that come with this season can make anyone feel a little bitter, like old Ebenezer Scrooge, and can send some running for the hills, or in this case, on holidays.

The weeks leading up to Christmas can be the perfect time to reflect on the choices made in your financial past and plan for the present and future.

The (financial) ghost of Christmas...

Past

According to Canstar, 76 per cent of those aged 18-34 struggled to pay their bills after Christmas last year and 20 per cent maxed out the limit on one or more credit cards.

On top of this, ASIC have reported that it took up to three months for 80 per cent of Australians to pay off the debt they accumulated at Christmas.

With this in mind, learn from the mistakes of your past, and if you had a blow-out last year, figure out why this may have happened and how you can reduce your spending this year.

If this does happen again or you already have credit card debt that you are finding difficult to pay off, consider consolidating your debt to reduce the interest charged so you can focus on a single repayment. You should also contact your lender to discuss your situation if you are having difficulty paying.

Remember this is not a long-term solution as you don’t want to be paying off that Christmas splurge for years to come.

So, if you do increase your home loan to consolidate debt or roll your Christmas expenses into a personal loan or interest free credit card, have a plan to pay it off quickly so that you incur the least amount of interest.

Present

With less than two months to go until Christmas, it’s time to get serious about planning for the coming weeks.

According to Fair Go Finance the biggest expenses during this season are presents, travel and food.

So instead of shelling out big bucks on gifts to please your family or loved ones, why not consider putting this money towards an experience you can all enjoy together.

If you pooled the money, you would have spent on gifts, food and flights you could take a family holiday or engage in an activity you’ll all remember for years to come.

But, regardless of what you do, be realistic about what you can afford to spend and look at exactly how much money you’ll have between now and the New Year.

This dollar figure will be your budget when buying presents, food or engaging in holiday festivities.

If you need help tracking your Christmas spending, try free mobile apps like ASICs TrackMySpend and getpocketbook.com.

Future

The New Year marks a new passage for many, but it’s difficult to start afresh with credit card debt.

Your choices in the lead up to Christmas will dictate your finances in the months after it. So, try writing down your goals for the next 6-12 months and work out where Christmas fits in your priority list.

Get an accurate understanding now of how much you can afford to spend this Christmas without putting your other goals for the year way behind. The good news is there’s nothing stopping you from planning ahead on how you can save next Christmas.

Save old decorations and wrapping paper that haven’t been used and put them in a ‘Christmas cupboard’. The next year will roll around quickly and you’ll thank yourself for thinking ahead.

Having a family can cost a lot, especially at Christmas. For more information about the cost of raising kids click here