Be a bit boring this Christmas, your wallet will thank you

The second anyone mentions the word “Christmas”, my brain can’t help but hit play on the Bing Crosby soundtrack. I’ve always loved the holiday season (some might say to an unhealthy degree), and I really do believe it’s the most wonderful time of the year.

But it can also be a financially fraught time, particularly during a sustained period of inflation. And given it’s a holiday largely based around food, gifts and travel, well, sometimes the best holiday of the year doesn’t gel with what our economy is doing.

There are some ways you can cut costs and still feel the holiday cheer.Credit: Getty

According to Deloitte’s Retail Holiday Report 2024, Australians plan to spend an average of $1002 this year across three primary categories. This includes an average of $425 on gifts for loved ones, $254 on non-gift spending such as decorations and clothing, and $323 on experiences such as travel, going to the movies and Christmas-related socialising throughout December.

While $1002 may seem like a lot of money, it actually marks a substantial decline in spending from last year, when Australians splashed out an average of $1192. That people are planning to spend less is seriously impressive because, as anyone who’s ever lived on a shoestring budget will tell you, finding a spare $190 is difficult at the best of times, let alone at Christmastime.

Data from the United States tells a similar story, with Morning Consult finding 30 per cent of Americans plan to spend less this year than they did last. But the data also raises a big concern that we might see here, too, and one that all Australians should aim to avoid.

Per their annual Holiday Finances and Expenses Survey, 20 per cent of Americans, while spending less, still plan to go into debt this holiday season, with 31 per cent aiming to use buy now, pay later schemes to cover expensive gifts that could take several months to pay off.

At the risk of being labelled the Grinch, I’m just going to say it straight: no Christmas gift is worth going into debt for.

You know what’s worse than going into debt? Being the pick-me gift giver on Christmas morning and making it awkward for everyone else.

While the desire to be lavish is completely understandable – or to give your children the experience of seeing a giant stack of presents under the tree on Christmas morning a la Home Alone – if doing so will set you back financially or put you at risk of defaulting on BNPL loans you can’t afford, it’s just not worth it.

Somewhat unsurprisingly, those likely to spend the most in Australia are Millennials and Gen X-ers, who shelled out an average of $407 and $408 on gifts respectively last year, and who are most likely to have school-aged children. Meanwhile, Baby Boomers (AKA the fun grandparents) spent $368, and Gen Z-ers, who are most likely to be earning the least, sensibly spent the least, at $281 a person.

If you are worried about going into debt or are planning to go into debt this year, there are some tried and tested ways to keep costs down while still having an end-of-year extravaganza to remember.

1. Have a frank conversation early. I’m in the minority of people who think conversations about money are great and that more people should be having them, but I realise most people would rather do just about anything else. If a quick chat is the difference between you taking on debt or not, however, please have the conversation.

Set a spending limit on gifts, organise a Secret Santa, or if there’s a particularly big gift your children want, ask if you can pool your resources to make it a gift from grandma, grandpa, mum and dad.

2. Respect financial boundaries. No two people’s financial circumstances are the same. So, while it might be tempting to say you can just pay for the entirety of the new PlayStation because you’ve done financially well this year, if someone asks for you to chip in only, it’s important to respect that.

Similarly, if the gift limit is set at $50, don’t be the person who shows up with a skincare set that everyone knows costs $175. Because you know what’s worse than going into debt? Being the pick-me gift giver on Christmas morning and making it awkward for everyone else.

3. Ship directly. If you’re not spending Christmas day with the people you’re giving presents to, one of the easiest ways to save money is to shop online and have gifts shipped directly to their addresses.

Just make sure you shop from a site that offers gift wrapping (helpfully, almost all online retailers do now). By not sending it yourself, you can save anywhere between $13 and $50.

4. Plan ahead for sale days. If you want to keep costs down this year, ask for present ideas in early November. This gives you time for research and budgeting, as well as looking for alternative gifts.

From there, you can keep an eye out the pre-Christmas sales – Singles’ Day (November 11), Click Frenzy (November 12-15), Black Friday (November 29), Cyber Monday (December 2) – and reap potential savings there.

There’s nothing wrong with a pair of socks for Christmas.Credit: Virginia Star

5. Be boring (it’s fun!) If you are trying to save money, but not giving a gift is anathema, spend wisely. Rather than buying something impersonal (a bath bomb set, for example), try to give someone something that removes an expense from their plate.

Can you give a magazine subscription, or buy a pass to their yoga studio? How about a manicure voucher?

Socks and jocks may be the stuff of gift-giving jokes, but there’s a reason some people love getting these boring but essential items, and that’s because it’s money they don’t have to spend and can then enjoy putting towards something else. Freeing up money for someone, especially during a sustained cost-of-living crisis, is in my opinion a pretty excellent gift.

Victoria Devine is an award-winning retired financial adviser, best-selling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also founder and co-director of Zella Money.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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