5 min read
Transform Your Holiday Spending Habits
Last December, Australians charged a staggering $28 billion to their credit cards, with many carrying over an average debt of $1,634 into the new year. This financial burden affected approximately 1.7 million people, taking months to resolve.
Plan for a Financially Healthy Holiday
Christmas doesn’t have to derail your finances. Forget about coupon codes or homemade gifts; what you need is a straightforward plan that allows you to enjoy the festive season without financial regret in January. This approach will also help you inch closer to your financial goals.
The goal isn’t to avoid spending altogether but to make intentional purchases that leave you in a better position afterward.
Effective Budgeting Techniques
To navigate the holiday season successfully, stop improvising. Consider setting up three distinct accounts: one for bills, another for guilt-free spending, and a third for savings or investments.
With each paycheck, automate your finances: allocate funds for bills, transfer a set amount to savings, and enjoy the rest without guilt. This system prevents the need for manual adjustments and ensures you don’t fall behind.
Set Clear Spending Limits
Determine your December spending priorities. Estimate costs for gifts, events, and travel, then establish a weekly spending cap within your guilt-free account. If you anticipate larger expenses, cut back in November to create a buffer. Enjoy the festivities, but remember that your credit card bill is your responsibility.
Maximize Savings with Smart Strategies
If you have a mortgage with an offset account, temporarily store your holiday funds there. This reduces your mortgage interest without altering your spending habits. Even small amounts saved can make a significant difference over time.
For those using credit cards for bills, ensure your card is set to pay off the full balance each month from your bills account to avoid high interest charges.
Invest in the Future
When buying gifts for children, consider pairing toys with an investment. Open a micro-investing account or investment bond and make an initial deposit. This can also serve as a valuable financial education tool for them.
