“I have a large family to buy for and a fair few bills over Christmas. I would like to know the best way to budget for the Christmas period that will help cover this and allow me to stay financially comfortable. How do I prepare my Christmas budget like a financial planner?"
-Question from Nathan in Whyalla, SA
Top answer provided by:
Kieran Menzie
Hi Nathan,
Thank you for submitting a great question. It is such a relevant question right now, especially with the rise of inflation.
I hear you and completely understand – I am from a large family as well (I have 10 siblings), plus a large extended family. If we don’t watch out, it’s very easy to get carried away over Christmas.
You have asked how to prepare your Christmas budget like a “Financial Planner”, and the best way to do this is to “plan” for it throughout the year. This may involve placing a certain amount (e.g. $10 or $20 a week) into a separate bank account throughout the year for Christmas gifts and the Christmas season.
If you haven’t had a chance to put money aside each week for Christmas, it is best to come up with a specific amount that you are wanting/willing to spend that still allows you to feel financially comfortable and secure. Include your other bills (that you mentioned) and expenses in this amount and work backwards to determine how much you have to spend on each person. Do not go over the limit.
For illustrations purposes:
If for example you wanted to cap your Christmas spending to $900, you could break it down as follows:
- Bills (you mentioned you have bills coming up) = $200
- Food = $150
- Boxing day sales shopping for yourself = $150
- Presents = $400 (then use this number as your key number to spend on presents)
The above is just to show you an example of how to break down a spending cap of $900. The numbers may be more or less than this. Most importantly, do not spend more than the chosen cap.
Some alternative methods to spend less money on gifts or the Christmas season, could be as follows:
Avoid using credit cards
Although you may get an interest free period to pay back the amount you spend on the Christmas season, you will most likely always spend more using a credit card.
Decide an amount and prepare your list
Before you go shopping, it’s important to decide what you are wanting to get before you go. Do your research and browsing online. If you don’t know exactly what you are thinking, have a specific amount in mind to spend. This will eliminate any expenses or gifts over the amount you have decided.
Consider arranging a Kris Kringle (KK)
This is a great way to reduce how much is spent on gifts each Christmas. Personally, this is what my family does – for those over the age of 18, we have a KK. We cap the amount at $50 for the KK. For those under 18, we still buy a gift for each of them, valued at $20 - $30.
You can do similar, with lowering or increasing the amounts depending on your family situation.
Consider giving service-related gifts
If financially you are unable to buy gifts, you could give your TIME. This may be to wash their car, give a massage, mow their lawn or teach someone a new skill.
Consider giving the gift of words
Not everyone actually likes receiving a physical gift, some people would prefer a nice card/letter with how you feel about them. Mushy I know, but often well received!
This is just a small list that may assist you in your Christmas spending – I hope it helps!
After this Christmas season, I would recommend confirming exactly how much was spent and start preparing for Christmas next year, by putting money aside each week to equal the same or similar value.
If you wanted to discuss any of the above further, feel free to give me a call on 03 9793 3722.
Kind regards,
Kieran
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