Less than 3 months to save for Christmas

If you can bear to think about it, Christmas is less than three months away. And while millions are expected to pay for Christmas largely on credit again this year, savings are available if you plan ahead.

In the lead up to Christmas 2012, Australians racked up more than $22.5 billion on their credit cards and withdrew $757 million in cash advances, according to a RateCity analysis of Reserve Bank of Australia credit card data.

“The earlier you start, the more money and stress you’ll save,” RateCity CEO Alex Parsons said.

“We know that last year, Australians planned to spend around $511 each, or $8.5 billion as a nation, on Christmas gifts.

“However, a third felt pressure to spend more than they could afford, with around half planning to use a credit card to cover the gap.

“This year could be another cash-strapped one for many, but with a bit of forward thinking you can have the Christmas you want for less.”

Top 10 tips to make your Christmas budget stretch further

Plan how you’ll pay (or pay back): Of course, one of the best ways to fund Christmas is through your savings. That way you won’t pay interest on your purchases – making the festivities all the sweeter! But it could take longer than three months to reach your savings goal in time for Christmas, in which case there are a few alternatives to consider, including credit cards (particularly if you repay the balance during the interest free period), personal loans and even your home loan.

Start now: The earlier you start, the more you’ll save. Starting your Christmas shopping early is a must if you want to get more for your money. Not only will you have more time to set a budget and decide what to buy, but you’ll also have time to shop around for the best prices so that come January, you’re not left with an empty wallet.

Boost your savings: Look out for bonus rates awarded for certain behaviours, such as making a number of deposits every month. Keep an eye out for introductory rates too – many high interest accounts offer a bonus rate of interest for the first 4 months from opening and rates upwards of 4.5 percent are available if you shop around.

Lock it away: if you’ve been diligent in saving money this year, or you’ve been lucky enough to get a windfall, such as a cash bonus from work, and you want to avoid the temptation to spend it, then consider locking your money away in a term deposit account. Most banks will negotiate on rates – you just have to ask! Or compare term deposit rates online.

Put your home loan to work: Adding extra savings to your home loan or into an offset account linked to your home loan can also be a tax effective option for savers. The rate that applies to your home loan is likely to be higher than the return on most savings accounts so your mortgage can be a good place to park your savings.

Reduce travel costs: Christmas is typically the most expensive time to travel in Australia so getting in early to buy flights, or scheduling flights outside of the extreme peak period, can help to trim costs. For those taking to the road this Christmas to visit family and friends, consider using a petrol price comparison tool such as MotorMouth’s cost calculator to search for the best pump prices.

Shop around: One of the easiest ways to keep Christmas costs under control is to avoid paying more than necessary for gifts and other festive must-haves, such as food and alcohol, so shopping around is a must. It’s possible to compare prices online for most goods and services – and even finances, which will also save you time spent at the shops or bank. Pre-Christmas sales can be a good opportunity to pick up a few gifts at a reduced cost too – but it’s wise to make a list of what you need and stick to it, to avoid impulse buys!

Check for cash-back offers: We’ve seen lots of interest – and heaps of choice – in credit cards that offer simple rewards, such as cash back or shopping voucher rewards. Banks are also getting in on the action by offering financial incentives to entice new customers to open transaction accounts. ING Direct, for example, pays an instant 5 percent back on payWave purchases under $100. The beauty of this is it doesn’t cost anything for consumers to switch accounts!

Use money-saving apps: there’s no shortage of mobile solutions to help you save money this Christmas and some of the best free ones include; ATM Hunter, which lets you find the closest ATMs from your provider; TrackMySpend, a government app that allows you to track your expenses, set limits and budgets; RedLaser, which allows shoppers to scan barcodes of groceries and other items to check they’re buying from the cheapest outlets; Coles and Woolworths’ apps, which helps you do a  budget-friendly Christmas shop; and Getprice, which helps consumers identify stock locally to eliminate waiting and delivery costs.

Make the most of credit card rewards: If you’re going to spend hundreds of dollars on Christmas presents you might as well get something back! More ‘no frills’ credit cards now offer rewards that were once limited to the premium credit cards. Some of these benefits include travel insurance, price guarantee schemes – refunding the difference if a lower price is found for a purchase, extended warranties and VIP packages on event tickets. But be sure the fee charged for program doesn’t outweigh the value of the reward – these programs aren’t suitable for every shopper!

Compare credit cards