Take charge of your spending this Christmas

The holiday season is usually a happy, busy time of year, but it can also be hectic, stressful and very expensive. If you’re traveling to see friends and/or family you’ll find that, like many other costs, travel costs seem to have increased considerably, no matter which mode of transport you plan to use. If you’re not careful, you can easily start the New Year with a debt hangover.

Financial survival tips for the coming holiday season

Create a holiday budget

Write down all the additional costs you expect to incur, such as travel or fuel costs, travel insurance, food, gifts, pet costs, and planned activities. Have you set enough money aside to cover these additional costs? If not, how can you pare them back to something that’s manageable and within budget?

Track your spending. Whether you use an app, spreadsheet or pen and paper, keeping track of what you spend will help you stay within budget.

Look for discounts

When you know what you want to buy, use the internet to search for sales, discounts, or a good price for each item. Many websites offer free delivery which could save you time and money. Sometimes even a small delivery fee could be cheaper than using your own petrol to go out shopping.

Only enter debit or credit card details online if the website is secure, easily identified by the padlock symbol before the website address.

If you decide to shop on sale days, like Black Friday or Cyber Monday at the end of November, don’t be tempted to buy things not on your list, sale items are even cheaper if you don’t buy them at all.

Deferring payment

If you are considering spreading out payment for holiday costs by using a credit card or a buy-now-pay-later (BNPL) scheme, make sure you have budgeted to make the repayments within the interest-free period, or by each BNPL payment due date. Try to keep credit to a minimum because it requires discipline and tight control to stay out of trouble.

Some things you may not know about BNPL schemes:

• Some providers perform credit checks which can negatively impact your credit score
• Most say they may inform credit reporting agencies if one or more payments are missed, which could negatively impact your credit score
• From September 2022, lenders must count BNPL accounts as debt when assessing debt to income ratios for a loan application, which means BNPL accounts reduce your borrowing capacity
• Using BNPL schemes may indicate to a lender that you cannot adequately manage your spending, which can impact your borrowing capacity
• They may appear to be similar services, however the terms and conditions are different for each provider, so read the fine print carefully.

Free activities

If you are looking for things to do, there are often free activities on offer at local parks or beaches, check local council websites to find out what’s on. A game of backyard cricket, beach volleyball, a nature walk, or a lively board game are also fun, free ways to spend time with family and friends.

The key messages here are to plan your spending, don’t spend more than you can afford, and minimise the use of credit, so you are less likely to start 2023 with a debt hangover.