How to save money on Christmas gifts without looking like the Grinch

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As the calendar ticks over into December, so it begins. Mariah Carey has finished warming up her vocal cords, prawn farmers are gearing up for their biggest month of the year, and the shops are teeming with people hunting for the perfect gifts for their loved ones.

That’s right, it’s Christmas baby! Sometimes called “the most wonderful time of the year”, it’s a month filled with good food, family catch-ups, and a good dose of awkward office Christmas parties. It’s also – unsurprisingly – filled with spending. Like, a lot of spending.

Christmas is an expensive time of year, but gift-giving needn’t cost the earth.Credit: Aresna Villanueva

The Australian Retailers Association and Roy Morgan’s annual spending predictions for the lead up to the big day is a whopping $67.1 billion, up just 0.6 per cent on last year but still the highest figure on record. This calculation also includes spending over last week’s Black Friday weekend, an American tradition which has well and truly taken root locally with about $6.3 billion expected to have been spent.

What’s the problem?

Included in their spending data, the ARA and Roy Morgan also asked a raft of shoppers if their spending habits this year might change given the rising cost of living and general interest rate pain. About one third of us (30 per cent) are saying we’re planning to spend less this year, and 61 per cent of us say we’re intending to spend about the same. The average gifting spend per person has declined by just over $50 to $646.

What you can do about it

If you’re one of the 30 per cent who are hoping to spend less this festive season, but might be struggling to work out how, here are a few suggestions:

• That’s a write-off: It may sound as if it’s too good to be true, but according to Mark Chapman, director of tax communications at H&R Block, it is, in fact, possible to claim a tax deduction on certain Christmas gifts. The main caveat is that your gift has to be a donation of over $2, to a charity or other Deductible Gift Recipient, so if you’ve got someone in your life who’d appreciate a charitable gift, it could be a win-win. “You can claim the deduction in the tax return for the income year in which the gift is made,” Chapman says. “Your receipt – which you will need to substantiate the deduction – should tell you whether or not you can claim a deduction.”

• Go back to basics: While we all love getting a shiny new toy, rethinking all the forms a gift can take can also be a way to save money. Paridhi Jain, founder of SkilledSmart and regular Money contributor, says thinking about gifts that don’t have to be bought can be a practical option this Christmas. She suggests baking, hand-making gifts, inviting people over for dinner, or offering to do chores or tasks for them that they hate. “Remember that the objective is to show your care and love, which can be done in so many different ways,” she says. Another good option is offering to pet-sit for any loved ones you may have with furry friends, as that can be another win-win.

• Go halvsies: Splitting the cost of a medium-to-high value present with a sibling or partner can be a good way to save a bit of money while still getting someone a killer gift. You could also combine this with some handmade pressies so your recipient still gets something just from you.

• Cash in those points: Throughout the year you’ve probably collected all sorts of loyalty points across a range of different retailers. Sit down and have a look at what redeeming those points might get you. If you’re like me, and you constantly forget to actually use your Flybuys, you could have a nice little pile of savings to cut down on the cost of Christmas lunch.
• Plan ahead: This tip won’t do you much good for this Christmas, but it could save you in 2024. Starting a Christmas budget, buying presents months in advance, and being ready to shop sales during the year can be a great way to lessen the spending burden when Santa comes knocking.

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.