Brightly coloured gift

How to Budget for a Debt-Free Christmas

You can’t believe you need to start thinking about Christmas already, can you? Does the thought of researching, organising, buying, and wrapping all those gifts and stocking stuffers make you excited or fill you with dread? Only a few years ago I fell into the latter category: Christmas was a big expense. I never knew what to get anyone, left everything until the last minute, and always seemed to enter the new year with a huge credit card bill.

In fact, one study found that around 4.7 million Aussies are still paying off their Christmas purchases at the end of January, and one in 10 of those with debt don’t expect to have paid off the debt within 12 months. This figure is crazy; going into the next Christmas season and STILL paying off last year’s purchases is not going to ensure a happy, relaxed time for you and your family.

Now that I have children of my own (this is my first Christmas as a mum of three!), the pressure to spend hundreds on toys and presents, as well as host a perfect Christmas day feast for my whole extended family is very real. Luckily, I’ve learned a lot since my days of putting the entire season on my credit card and I’m going to share my top tips to set you up for a stress-free, debt-free holiday season.

Set Your Budget
My mind was blown when I realised I could set a budget for Christmas and know how much I had to spend.

Gifts are an easy place to start: set your budget for adults and children, plus a couple of extra gifts (if you choose to) for your childcare educators, teachers, work friends, etc. The budget challenges me to find presents that are meaningful, useful, and, most importantly, mindful. I’ve also done away with stocking stuffers and little bits and pieces that my nieces might like initially but usually end up as clutter by February.

Make like Santa and write your list of gift recipients. Set your budget for each of them and add up each one to get a total gift budget for the year. I stick to $50 for adults and around $40 for children in my extended family. I budget a bit more for my husband and kids without going overboard.

Christmas decorations are another category in your budget. Many of us have a stack of decorations sitting under the stairs, but who can resist the gorgeous Christmas section at Target or Myer? Not me. Take stock of what you already have, and set aside some cash to replace any items that are worn or broken, and purchase a couple of new ones to add to your collection.

If you are hosting Christmas Day festivities, you can also create a budget for food and drinks based on the number of guests and your usual traditions. In our family, we have mimosas and a barbeque breakfast, along with a delicious cheese platter for afternoon tea, so those items are all budgeted for.

Bonus: If you’re old school like me, allocate some money in your budget for Christmas cards and postage.

Sinking Fund

So you’ve added up all your budget categories and come up with a huge number. Don’t get overwhelmed! We already knew Christmas was expensive, but this year we’re not hiding it on a credit card and dealing with it later.

Split your big number into chunks, such as the number of paydays left until Christmas. Don’t worry if this still seems like a lot – any money you can save before the Christmas rush will help! The good news is that you now have an idea of how much Christmas is going to cost next year as well, and when you break that large number down into a whole year’s worth of paydays, it will seem very manageable.

A Christmas Sinking Fund changed my life. I stash away $50 every payday and by the time I’m ready to buy presents and decorations, my little sinking fund has grown to almost $1,200. Considering Christmas comes around at the same time every year, preparing for it is very simple.

DIY Gifts

There is nothing wrong with a DIY gift, and the time and effort you put into it truly makes it special. Homemade sugar scrubs in some pretty glass jars, a wreath made from dried flowers picked from your garden, knitted items, the dry ingredients for your favourite cookie recipe in a jar. All these things are cheaply made, look fabulous, and are truly given with love.

Gifts for teachers or colleagues, in particular, don’t have to be expensive. Trawl through Pinterest or think about your talents and hobbies to come up with some gifts that don’t cost an arm and a leg. As a bonus, you’ll probably be giving a unique gift – how many mugs and candles do you think a teacher receives each year?

Shop with Rewards Points

Savings your rewards points from loyalty programs through the year is a savvy way of cutting your Christmas costs. When shopping regularly, like weekly grocery shopping at major supermarkets, your points could well cover your entire Christmas shop. Check your points are set to “Save for Christmas”, and make sure you take advantage of bonus offers or boosters.

For presents, programs like Nurch offer gift cards to a huge variety of stores. If you have a hard-to-buy-for sister, a gift card to one of her favourite stores (Pandora, Peter Alexander, Review, JB HiFi) could be just the ticket, and by using your Nurch points it will cost you nothing! Nurch also offers gift cards for larger experiences from RedBalloon, and services like Netflix if you want to give some out-of-the-box gifts.

Make a List

If your child mentions a gift they’d really like, write it down or take a picture of them holding the item. If they have lots of “wants”, you can cull some throughout the year by asking which item they would prefer at Christmas: the one they’ve just seen, or the one they have been asking for since January.

We can’t buy kids everything they ask for, and this type of conversation teaches young children about prioritising our spending and curbing impulse spending by remembering what they really want. The List is also a great way to collect gift ideas for the grandparents, who may ask what your little one would like for Christmas.

Additionally, when you find items at a discounted price, you’re able to refer to your list and purchase gifts throughout the year. Another way to avoid to December rush!

It Doesn’t Have to be Insta-Worthy

I’ll say it again: You Don’t Have to Style Your Christmas For Anyone Else.

Your decorations are special to you. The food you like might dictate a strange-looking Christmas dinner (fun fact: when I was young, my mum stopped buying a turkey for Christmas because we kids refused to eat it. To this day, our traditional family Christmas dinner is still homemade schnitzels and potato salad).

You don’t have to deck your house out with decorations or give everybody you know a gift. Christmas is meant to be spent with family, enjoying time together, and not stressing about whether your holidays measure up to the influencers and professionals on Instagram.

Spend money on traditions that are meaningful to you and your family. Decorate as much or as little as you want. Eat food you enjoy, not food you feel like you should have because it’s Christmas. Be mindful when it comes to gift-giving. My children are still young, and get just as excited over a new scrapbook and some felt-tip markers as they would over a giant remote-control monster truck.

This may change over the years, and only you can decide how much you are willing to spend for a Christmas season that is perfect for you. One thing I know for sure is buying for yourself and others feels even better when you know you won’t be facing a credit card bill come the new year.



Author Bio

Emily Keable (@emilyonmoney) is a personal finance addict and millennial working mum from sunny Rockhampton, Queensland. Passionate about helping women understand and take control of their finances, she shares tips, information, and her own money journey on the Emily on Money page and blog HERE