The holiday shopping season is in full swing, and Aussies are expected to spend a whopping $70 billion in pre-Christmas shopping alone. With the added cost of gifts, decorations and entertainment, many families feel pressured to spend well beyond their means. Starting the new year with financial stress is far from ideal, but it doesn’t have to be this way. If you’re struggling to stick to your budget – especially at this time of year – here are 5 smart ways to avoid overspending this holiday season.
1. Set a budget (and expectations)
Write a holiday budget and break it into separate spending categories for gifts, travel, food and decorations – don’t forget to include your everyday expenses too. Then set a spending limit for each category and track your expenses as you shop.
If you’re not sure how much to budget for each category, look at what you spent last year. Go over your credit card and bank statements to get a clearer idea of your spending habits and identify the areas you’d like to cut back on this year.
Most importantly, be honest with yourself – and your family – about what you can realistically afford. A transparent conversation that sets expectations can take the pressure off of you.
2. Avoid getting caught out by “spaving” deals
Online deals can be tempting, especially at this time of year when retailers ramp up their promotions with offers like free shipping or gifts with purchase when you spend over a certain amount. Unfortunately, these types of deals – and others like it – can lead to what’s known as “spaving” – spending more to save more.
Be careful not to overextend yourself chasing savings with bonus items that stretch your budget. Shop intentionally and stick to your plan to avoid getting caught out by “spaving” deals and end up overspending.
3. Consider paying with cash
Many shoppers use credit cards for holiday shopping, but paying with cash could be smarter. Research shows we tend to spend more when using non-cash payment methods – such as credit cards or buy now pay later - partly due to the psychological effect of “pain of paying.”
Handing over physical cash feels harder than swiping a card, which can naturally curb your spending. Furthermore, shopping with credit can be expensive with high interest rates and additional fees, making cash – or your debit card – a more economical alternative.
4. Take a break from social media
To avoid feeling the pressure of “keeping up with the Joneses” or being tempted by targeted digital ads, try logging off your Facebook, Instagram or TikTok accounts until the holidays are over. Taking a break from social media – and doing a digital detox – could be the best gift you give yourself – and your family – this Christmas.
The same applies for promotional emails that hit your inbox, tempting you with deals and offers you really can’t afford. Don’t be afraid to unsubscribe from them, as you can always sign up again later. And if you really can’t imagine being off social media, try tweaking your account settings to show fewer personalised ads.
5. Create shopping hurdles
Shopping online and spending money has never been easier and it’s not surprising so many of us struggle to cut back and stick to a budget. Creating small obstacles or shopping hurdles to slow you down can help prevent impulse buys.
Remove your credit card details from your web browser so you have to manually enter the details each time you make a purchase. This added layer of inconvenience forces you to pause and rethink your decision.
You could even go a step further and block the websites where you know you tend to overspend or are tempted into making impulse purchases. Remember also to look ahead to the new year and revisit your financial goals to ensure your holiday spending aligns.
Start your new year right
Stay in control of your holiday spending this season and start the new year on the right financial foot. For more tips or advice on managing your budget, contact Mortgage Express today, and connect with financial consultant for personalised support.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
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