Friday, 6 December 2013

Tips on budgeting and spending this Christmas season

Christmas has come around again and like most people (I imagine) I have not done my Christmas shopping in advance.  Now Christmas is an expensive time of the year for almost everyone but especially if you have a family with children or a large amount of close relatives and it is the norm for you to give Christmas presents to everyone.  It is the time of year where it is really easy to blow your budget and to rack up some serious credit card debt.

We all know that we shouldn't however invariably we get carried away.  This post will give you several strategies to keep your spending in check (even if you have children and a large family) and will hopefully mean that you wont be suffering as badly from those post Christmas credit card blues.

Set a clear list of people that you need to buy gifts for

The problem with Christmas shopping is that we often buy gifts for people on impulse based on things we see that we may like for them.  While this is very thoughtful it really blows out the budget.  The best thing to do is to make a defined list of people that you need to buy a gift for.

For example my list includes my immediate family (2 people), my girlfriend, one Kris Kringle (or Secret Santa) present and one 'wishing tree' present.  My list used to be 4 - 5 times as large but I really found that I was spending far too much money on Christmas presents.

If you have a large extended family that gives gifts set up a Secret Santa (or Kris Kringle)

This is something my extended family started doing years ago and it made so much sense.  When I was a kid I used to get a present from every single one of my aunts, uncles and extended relatives.  What I didn't realise was that my parents had to fork out for every single other child and most of the other adults in the group.

What our extended family instituted was a Secret Santa system.  A few weeks before Christmas we would pick names out of a hat and we would only be allowed to a buy a present for that person which would be shared on Christmas day.  You were not allowed to spend more than $20.  The cost that your family would need to bear was directly proportionate to how many people were in the family.  For example a family of 4 would be buying gifts for 4 other people so the total cost could not exceed $80 instead of the many hundreds of dollars that it used to cost.

Set a budget for each person...then stick to it

You know how much you can afford to spend on Christmas presents.  It is best to sit down and work out how much you 1) can afford to and 2) want to spend on each person.  You need to do this before you go out and start looking for
presents as it is really easy to get carried away (especially with children when you know how much they want different gifts).

The amount you set aside really depends on your own situation.  I put away money last month for Christmas presents.  I love buying presents and I put money away in advance so my total spend is going to be slightly higher than in previous years at $600.  If you are struggling or even trying hard to save for something you don't need to go near this amount.  Racking up credit card debt is the worst Christmas present you can give yourself.

I have allocated $30 for my Secret Santa, $70 for my wishing tree present (I like to buy a gift for a child who wouldn't ordinarily get a gift on Christmas), $200 for my girlfriend and $150 each for my immediate family.

You really need to stick to your budget once you set it - it is so easy to get carried away.  If I spend more than $150 on my family members, I'm going to spend less on my girlfriend and vice long as the total doesn't exceed my budget.

Gifts don't have to be expensive to be treasured

When I was growing up my parents could never work out how I managed to spend far less than them (often less than $20) and get a gift for my sibling which they always preferred to what my parents got them.  I just spent a fair while trying to suss out what they really wanted.

You don't need to spend hundreds of dollars to get a treasured gift for a loved one.  Parents you don't need to get the latest Playstation 4 (they release it around Christmas intentionally so you're guilted into buying it), boyfriends you do not need to get your girlfriend a piece of jewellery that costs hundreds of dollars.

The best present I ever received was a rare book that I really wanted which my sibling managed to find in a second hand store for only $10.

Good luck shopping this Christmas season...

I think many people get themselves into financial strife around Christmas time because they equate the amount the spend on presents for their loved ones to the amount of love they have for them.  I think this is a flawed approach which retailers are more than happy to exploit.

Please stay sensible this Christmas shopping season and hopefully you will be in a better financial position for it.

How do you budget for Christmas?  Do you have a different approach to mine or tips which could help others?

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