How to avoid the debt hangover with these Christmas shopping tips

Co-authors: Ellie McLachlan and Michelle Norton 

We are just less than a month away from Christmas, have you got your debt defences ready?

Whether you like it or not, Christmas songs are blaring through shopping mall speakers, mince tarts are fully stocked at the supermarkets and shop fronts beckon festive shoppers with sparkle and sales signs.

The truth is, Christmas is the biggest spending time of the year and there’s constant pressure to spend more than you can afford.

But, to avoid this guide becoming the proverbial lump of coal in a santa stocking, let’s clear something up. You can still hit the shops this Christmas (if that’s your bag) just do it the smart way.

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Christmas presents – size does not always matter

First of all, address your own insecurities! Realise there will always be people who spend far more than you do and that is it foolish to even think you can put yourself out there at the same financial level. There are still plenty of ways to have a lovely Christmas break, without overdoing it.

We buy, spend, eat and drink a lot more than we need or should over the Christmas season. It’s surprisingly easy to cut down on all these expenses, if you don’t want to blow the budget. For example, use the decorations from last year, or make your own instead of buying new ones. And think twice about the food and drinks you really need – why not even try making your own?

Set Christmas spending expectations for your kids

Manage children's expectations with gifts

A child’s Christmas wish list can go on forever – they have pretty good imaginations! So educate your children from the start that Christmas is not only about presents. Make them understand that most kids do not have the things they have, and it’s important to spend time with family and friends.

Combine practical gifts with the more expensive ones they are desperately wanting, and explain that sometimes the greatest gifts come in the tiniest packages. Sometimes one really nice gift is worth a lot more than a dozen little gifts.

If you don’t want to go down the path of clichés, then simply set them a dollar limit. Do it early – in November – and they can have hours of fun (and angst) pricing potential gifts and working out how to allocate those precious dollars for the best effect.

Buy the necessary stuff first

Pay for the necessary Christmas items before the "nice to haves"

If you have Christmas-related costs that are non negotiable (an accommodation booking, for example, or Christmas food you’ve promised to make), buy them before you spend your money on anything else. That way you can cut back on the “extras” if you need to.

Obviously, you’ll need to buy things like gifts and food for your Christmas day meals, but maybe give the flashy drinks and decorations a miss this year? You can always make your own, especially if you’ve got kids with a knack for arts and craft.

Save with home-made Christmas gifts

Save money by helping your kids make Christmas gifts

Be creative and make your own handmade gifts. There’s no doubt these will show the amount of effort you’re willing to put in, and in the end, will add quite a personal touch.  There are many simple and inspiring tutorials on the internet, so log on, and have a go!

Quality over quantity wins the day

Understand that sometimes the best Christmas gift you can give is quality time and not necessarily money. Elderly relatives immediately spring to mind, as do the Christmas work undertaken by various charities. Some examples of this include donating old blankets for a blanket drive or volunteering to help collect donations. Doing something for others can contribute a sense of accomplishment, charity, and satisfaction. Get the kids involved as well.

Buy Christmas gifts online

Did you know that Gumtree recently announced the secondhand economy is worth $40 billion? Instead of buying new decorations or other such gifts, have a little shop around; you’ll be surprised by what you might find.

Leading on from that, if you’ve got some junk lying around that you know you’ll never use, consider the option of selling it. It might be exactly what someone else is looking for, and you’ll save money along the way.

Run a Secret Santa

Running a Secret Santa with family and friends, rather than everyone buying a gift for everyone else, will considerably reduce the number of gifts you need to buy. This has the advantage of:

  1. Not cluttering up your life with a lot of small things that you don’t really need.
  2. (Hopefully) ensuring that you receive one really nice gift that you actually want.
  3. Saving you money!

How does a Secret Santa work? There are a few different ways you can run it, but generally all participants’ names are written on slips of paper, placed in a hat or a box and shuffled around. An approximate dollar limit is usually set (which can be as high or low as the group decides). Each person takes it in turn to draw out a slip of paper. The name written on that piece of paper is the person they must buy a gift for.

Budget for Christmas

Making a budget

Set a written Christmas budget and whatever you do, don’t exceed it. Without a plan it is easy to fall into the compulsive buying trap during this tempting season. Include gifts, decorations, parties, holidays and clothes in this budget and once you’ve set it, search around for bargains, sales and discount offers.

As hard as it may be, decline offers from people who have pricey festive plans.  Or, even better, suggest cheaper alternatives such as picnics, or beach days. You don’t need to avoid socialising altogether, you just might have to get a bit more creative with the ideas.

Pay for Christmas with cash

A great way to stay out of Christmas debt is to avoid relying on credit cards. Try to pay in cash and avoid using your credit card too much over the festive season. It’s too easy to rack up a debt for later if you buy on your credit card. Studies have shown that often when paying with cash, people tend to be more careful about each dollar they spend, because the physical decline of the money in their wallet is a great visual reminder to be careful!

When using a credit card, people don’t have the physical cash on them and it’s harder to keep track of purchases made. However, there are apps to help you keep an eye on your credit card spending, so it all depends on your personal self-control as to whether credit cards can work for you. Also, make sure to be cautious about ‘buy now, pay later’ retail offers such as Afterpay, unless you know for sure that you can manage the payments before the interest rate kicks in.

Read more on the birth of ‘pay later’ schemes

If you do decide to use your credit card this Christmas though, remember the golden rule: pay off your card in full each month, to dodge the credit card interest.

Pay your January bills in December


Once the Christmas bare necessities are bought, pay all your bills that are going to fall due in the month. This will reduce the stress of non-payment, keep your credit rating squeaky clean, and give you a much better idea of what you can truly afford to spend on “extras”.

If you’re going to run short, phone the bill issuer and negotiate a payment plan.

If you don’t have any bills due soon but you know they’re on their way, try setting aside as much money as possible so that when they do show up, you’re not caught out.

To finish…

Last but not least, it is important to remember you can have a great deal of fun over Christmas, irrespective of how much you spend. And saving money doesn’t mean you have to stay at home either. Every city and region has lots of free things families can enjoy – from swimming, to outdoor movies, to walks.  Do a little bit of research – you might be surprised with what you find! Enjoy your Christmas break with a stocking full of presents, not a stocking full of debt.

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