Christmas might be the season of goodwill, but it’s also the most expensive time of year, with the average Australian spending $893 on festive expenses in 2021.

But while splashing out might be tempting, you don’t want to be paying for your festivities well into the New Year.

So here are five tips to keep your finances on track during the festive season.

1. Set a budget

If you’ve saved for Christmas throughout the year you’ll know how much your budget is.

But if you haven’t saved for Christmas, your budget should probably be what you have left after paying for your regular monthly expenses.

To control your spending, you can consider setting separate budgets for:

• Christmas dinner
• Eating out
• Gifts
• Holiday activities
• New year’s parties

Once you have a budget, you’ll need a way to stick to it: using cash is an easy way because your budget is spent when the cash runs out.

If you are using credit or debit cards, set aside some time at the end of every shopping trip to tally how much you’ve spent and how much of your budget is left. There are apps to help you with this.

2. Shop around for the best prices

You can check stores online first to see which stores offer discounts or if there are online-only deals. Also check for specials, like free delivery if you spend a certain amount, or limited-time offers.

If you prefer to shop in stores, you can still compare the prices of expensive items with online prices on your phone.

Another idea is to visit local Christmas and craft markets to look for affordable food and gifts.

3. Be wary of buy-now-pay-later services and credit card debt

Buy-now-pay-later services are the same as credit card debt – they can trap you in a debt cycle.

Because part of your next salary must pay off previous spending, there might not be enough left for your current spending. So you’ll need more debt, which can become a never-ending cycle.

Buy-now-pay-later can also reduce your credit score even if you make your payments on time, because it increases your debt.

Using debit cards will give you the same convenience without the risk of falling into a debt cycle.

4. Agree on spending limits

If you’re buying gifts, discuss how much you’ll spend per gift, or per family. You can also agree to buy collective rather than individual gifts.

Other ways to save money on gifts are to:

• Have a theme – like a chocolate Christmas where everyone only buys chocolates as gifts
• Allow only handmade or personal items, which may include baking cookies or offering to do a chore, like washing someone’s car or dog
• Limit the gifts to one per person – everyone brings and receives only one gift

5. Regift unwanted items

You may have received a gift you didn’t like or haven’t used. If it’s still in its original packaging or brand-new, you could consider regifting it.

But because this may offend some people, be careful who you give it to. For example, if you received the gift from your family, consider giving it to a friend who doesn’t know your family.

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