How to avoid overspending at Christmas
Published on Mon Dec 4 2017 in Money
The silly season is upon us! Time for giving gifts, yummy treats and cherished traditions. Whilst many Kiwis worry about their waistlines post-Christmas, others may feel a strain on their wallets as well.
In December 2016, New Zealanders spent $6 billion on their Christmastime celebrations, breaking the previous year’s record by over $300 million.1 We also broke shopping records on Christmas Eve, clocking 157 transactions per second on that day alone!
With spirits high, it’s easy to get carried away. Overspending at Christmas is common, with one in three Kiwis admitting to doing so in 2016.2 The average amount overspent was $1091, but some respondents couldn’t come up with an exact figure.
The importance of budgeting
A big contributor to overspending at Christmas is not setting a budget early. The holiday shopping season seems to start earlier each year, making it harder to track spending. Many shoppers start purchasing gifts months in advance in order to take advantage of early sales and specials. By the time December rolls around, they may underestimate how much they’ve already spent.
When making your budget, it’s easy to forget that Christmas can be more than just gifts and a holiday dinner. It may also include travel plans, multiple special family meals, and hosting parties. These events can account for much of a family’s spending from November through January.
People also often overlook “convenience” spending that can come during this busy season. Takeaway and fast food can add up fast, as can services like babysitters, taxis or gift wrapping. Christmas spending can also continue well into the New Year when credit card and interest payments come due.
Stick to your limits
Of course, setting a budget is useless if you don’t stick to it. Even the savviest shoppers can throw a well-crafted budget out the window come December.
Businesses use many tactics to encourage shoppers to spend more than they intend. Constant sales, loyalty programs, and decoy pricing are just some of the tricks used by retailers year-round. It’s easy to be taken in by low sale prices, buying more than you planned simply because you’ve “found a deal.”
But sometimes overspending has little to do with clever marketing. Time-poor New Zealanders often leave their Christmas shopping to the last minute, with the 23rd of December being the biggest spending day of the season most years.1 Leaving purchases to the last minute can mean missing out on items and buying more expensive substitutions.
Christmas is also an emotional time, bringing back memories from youth. Adults may feel guilt about how much they give to their children or grandchildren, wanting to create wonderful memories. This can also be accompanied by pressure to give the kids “more than I had at their age.” It doesn’t help that peer pressure and ads targeting children can make young ones feel that they’re missing out if they don’t get the hottest toy for Christmas.
Money saving strategies
Christmas may be a season of spending, but it doesn’t have to mean overspending. A few simple strategies can help you stay on track:
- Start budgeting early. Maybe even as soon as October. Consider setting aside a small portion of your budget for last minute gifts or overlooked needs.
- Include convenience costs and “forgotten” expenses. Account for takeaway or fast food meals, babysitters and taxis. Hosting parties or out-of-town guests may mean higher grocery and utility bills.
- Limit gifting. Instead of buying gifts for everyone, organise a “Secret Santa” with adult family members. They may be glad to only buy one gift, too! You can also organise a potluck get-together with friends in lieu of swapping presents.
- Shop early. Avoid gift disappointment and the need to buy more expensive alternatives. You can also shop smarter, buying only what you need and avoid getting taken in by deceptive sales.
- Try not to use credit cards. Retailers may charge transaction fees on credit card payments, but paying cash will help you avoid this. If you are carrying a balance after the holidays, pay more than the minimum payment whenever you can to decrease interest charges.
How do you navigate Christmas spending? Share your money saving tips with our community on Facebook.
1. The Register, Data dump: Consumer spending over the Christmas period.
2. NZ Herald, Kiwis overspend by more than $1000 on Xmas.
About Author: Momentum Life is a leading provider of Life insurance and Funeral insurance in New Zealand.
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