Money-saving tips to stay afloat for a financially-painful Christmas

Times are tough, and Christmas won’t be cruisy for households this year on the spending front. But there are things you can do and plan now.

Nobody wants to reach Christmas Day with nothing left, so plan now. Picture: iStock

Households are heading for the toughest Christmas in years when it comes to finances, and high living costs and interest rates mean many must change their spending strategies.

Christmas Day is just three months away, and acting now is the key to lowering financial stress, according to personal finance specialists.

People often pay a “convenience tax, through last-minute, more costly purchases”, says money coach Karen Eley, who adds this year should be easier than usual to have money-related discussions with family and friends looking to cut back.

“Having more time allows you to research and price compare items to ensure you get the best deals,” Eley says.

“Not only does this reduce last-minute stress, but it also avoids the potential price hikes as Christmas gets closer.”

Sort My Money founder David Rankin says this Christmas is shaping up as the “ultimate challenge” for household finances battered by years of interest rate rises and surging living costs.

Money coach Karen Eley says people can save by stocking up now. Picture: Supplied

“It’s a peak-cost Christmas – If you can get through this Christmas you can get through anything” he says, noting that inflation is moderating and interest rate cuts loom. But Rankin says because we live in the southern hemisphere, Australians are hit by a triple-whammy in the December-January period – Christmas, holiday expenses then back-to-school costs.

Here are seven ways to combat the strain.

1. EMBRACE BLACK FRIDAY

Black Friday sales have replaced the traditional Boxing Day sales for many big-spending consumers.

Rankin says this switch has been good for Aussies for timing. “You cannot do Christmas present buying on Boxing Day, but now you can actually do your Christmas shopping in the sales,” he says.

“If you have a cash buffer to do Christmas shopping in November, I would recommend waiting for the Black Friday sales.” This year it falls on November 29.

2. HELLO KRIS KRINGLE

Reduce costs by suggesting a Kris Kringle approach now, before anyone in your circle starts buying presents.

“Families are doing more and more Kris Kringle and that’s becoming more culturally the norm,” Rankin says.

“Everyone understands there is a need to spread the load to cover costs,” he says.

3. SECOND-HAND IS OK

Giving second-hand presents also has become more acceptable culturally, and has the bonus of being environmentally friendly, Rankin says.

“Second-hand is no longer second best,” he says. “It aligns with the fact that we are all in the same boat. Today it’s totally acceptable.”

4. STOCK UP THE PANTRY

Eley says while the Black Friday sales are a great idea for gifts, people also can buy other Christmas items early. “You can do the same thing with non-perishable pantry items when they are on special at the supermarket,” she says.

5. SENTIMENT BEATS SPENDING

Eley says the popular saying, “it’s the thought that counts” is certainly true.

“Instead of focusing on how much you spend, consider how you can create a meaningful experience or personalised gift for the recipient,” she says.

People can get creative about gift ideas for loved ones, Eley says. “Maybe it’s an act of service gift like mowing someone’s lawn for the summer.”

6. MAKE A SCHEDULE

Not having an action plan can be a recipe for financial disaster.

Eley says schedule your plans and activities early. “Calendars get hectic this time of year so plan out your travel, social and family commitments so you can prioritise the important things and not overcommit your time or money,” she says.

7. MONITOR SPENDING NOW

Rankin says now is the time to prepare better for future Christmases.

Simply write down every dollar you spend on the upcoming holiday season, and then early next year divide it by 50 weeks to get an idea of your Christmas saving requirements, he says.

“A lot of people don’t know what they spend on Christmas.

Originally published as Money-saving tips to stay afloat for a financially-painful Christmas