Money tips and traps for 2023 Christmas cost crunch
Rising living costs are tough enough without the looming spending pressures of Christmas, but there are things households can do.
Winter ends in one week, and Christmas comes in four months – a scary proposition for many cash-strapped households.
The upcoming festive spending season is expected to be a tough one for many people after a dozen interest rate rises since mid-2022, surging living costs, and wages not keeping up with inflation.
A spring clean of people’s personal finances may be a good idea, along with a plan for approaching Christmas costs in 2023.
MyBudget director Tammy Barton says many Australians are bracing themselves for an expensive end to the year.
“With an increase in cost of living – from groceries to petrol, not to mention the impact that increased insurance premiums, energy bills and interest rates are having on our back pocket, Christmas will no doubt be a more expensive one for many of us this year,” she says.
Barton says it is never too early to start planning for Christmas, which is one of life’s most stressful times, according to Relationships Australia, along with divorce, moving house and changing jobs.
TOP TIPS
“Now is the right time to create your Christmas budget and start putting money aside,” she says.
“When you’re putting together your budget, remember that the perfect Christmas is perfectly affordable.”
Barton’s top tips to navigate the festive season in good financial shape include:
• Having an early list of who you will buy gifts for, what you will buy them, and how much you will spend: “take advantage of the pre-Christmas sales”.
• Setting a spending limit and keeping receipts, as we often spend more than we think. Having a record helps you plan.
• Tightening your belt for the next four months by trimming little luxuries such bought lunches and coffees, takeaway meals and nights out, and cutting back social outings until December.
• Looking for savings elsewhere at home, such as switching to cheaper brands, turning off extra fridges or freezers and shopping for insurance.
Canstar spokeswoman and author Effie Zahos says the cost-of-living crisis will hit households hard this Christmas.
BUDGET PAIN
“Households with a $500,000 mortgage have had to reshuffle their budgets by around $1300 to accommodate extra mortgage payments, leaving them very little wiggle room for all the usual Christmas trimmings,” she says.
“Those renting are just under the same financial pressure, if not more.”
However, Aussies have been relatively resilient in the past year when it comes to event shopping, and will often save up to spend big, Zahos says.
“It’s the reason why Taylor Swift tickets sold out in just two hours, and the end-of-financial-year sales came in very strong,” she says.
“Households are quite happy to miss out on micro-treats – think coffees, movies or dining out – if it means they can pick up their passion purchases.”
Zahos says it makes sense to have a Christmas budget strategy now. Work backwards in order to move forwards. How much will the festive season cost you? Divide that by the number of pay days and then work out how you intend to fund it.”
She says costs can be cut by shrinking your gift lists, comparing prices and delivery options online, using loyalty and reward points accumulated during the year, considering a Christmas club and buying discounted e-gift cards.
“Edible gifts like biscuits or jams are always appreciated and cost next to nothing.
“Consider family gifts instead of individual presents.”
MyBudget’s Barton says spring cleaning your finances can be a great way to find savings before Christmas.
She suggests creating a budget, using comparison services and websites to compare insurance premiums and switch to save, reviewing your level of insurance cover, comparing mortgages and other loans, scrutinising subscriptions by weeding out what you are not using, and shopping around for a better deal on phone, internet and utilities.
FINANCIAL TRAPS THAT CAN CRUNCH YOUR CHRISTMAS
• Emotional and impulse spending.
• Credit card promotional offers.
• Scams that target online shopping and parcels.
• Trying to keep up with others.
• Putting Christmas on credit.
Source: Canstar, MyBudget
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