Plan your Christmas spending and have a Happy New Year!

The recession has prompted many people to focus on their financial situation and take better control of their spending. But there’s a risk Christmas shopping could undo that focus as many families feel pressured to spend beyond their budget.

The consequences of that make for a very unpleasant shock in January when the bills come in or when there’s not enough money left for essentials.

It’s understandable that people probably want to forget about the belt-tightening and splash out a bit for Christmas, but you can take a careful approach by making a budget of what you can afford and sticking to it.

Another trap to be avoided at Christmas time is the additional costs incurred for different methods of paying for goods. Our Christmas spendometer can help you work out the full costs of each payment method.

For example, the spendometer shows that buying a $199 pair of earrings might cost $206 if put on a credit card for three months. But if you put the same purchase on hire purchase for a year the total cost could go up to $407.

One of the best things people can do at this time of year is plan. That means work out how much you want to spend, make a list, and start early.

Follow these five Christmas shopping tips:

1. Set a budget.
2. Make a shopping list that matches your budget and stick to it.
3. Try something different like homemade gifts, or only buying presents for the children.
4. Shop around - especially if buying large items.
5. Start now, if you haven’t already. Last minute shopping is a recipe for blowing the budget.

Published 9 December 2009