Christmas is traditionally a time for goodwill to all, with images of mountains of gifts under the tree.
But generous gift giving can lead to a financial ghost in the new year, when the lavish presents have been cast aside.
The cost of Christmas
It is estimated that parents in Australia spend over $200 on each of their children at Christmas on presents alone.
The average Australian will also spend over $1000 on entertainment, food, drink and travel during the festive season. Add the price of this with the cost of gifts can result in a hefty credit card bill.
A better way to spend
As if to add insult to injury, over $1 billion worth of Christmas gifts are returned to shops. This money could be far more useful to children in the long-term if their parents put some aside to mature in a high interest savings account.
If parents halved the amount of money spent on their child each Christmas, it is likely most would have more than $1000 by the time their child reached adulthood. Paid into a high interest savings account, this could mature into enough money to buy the child’s first car or pay towards their university education.
Related: 10 Ways to budget over Christmas
Save it up
With the remaining money that is available to spend, gift givers need to ensure it’s an amount that they can afford.
For those who find it hard to think ahead, why not set up an automatic payment each month into a separate online savings account with a high rate of interest, then you can spend those savings from December.
Similarly, the best way to buy gifts is to gather them gradually – watch out for online specials, buy items when they’re on sale throughout the year and don’t get caught up in the Christmas panic shopping. Start a present box and whenever you see a cheap and simple present buy two of them and put them in your present box for unexpected birthdays and Christmas time.
The thought that counts
Anyone can throw $50 at a perfumed bath set, but a photo album of that year’s memories or a ribboned bag of homemade fudge may end up far better received. Homemade gifts are far less expensive and can be a fun way to keep children busy during the summer holidays. Framed pictures, baked goods or personalised hampers can be excellent options for friends and family, saving you hundreds of dollars along the way.
Presents at Christmas are part of the magic. Children love unwrapping gifts under the tree and adults never grow out of the excitement of receiving presents. The key to an affordable and debt-free Christmas is to plan ahead, get creative and think about your money investments long term.
Related: 10 Ways to have a “Green” Christmas
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