'Tis the season… for spending. Here are five ways to avoid breaking the bank during the Christmas period. 

The summer months can be a time of heavy spending for many Australians, particularly in the lead-up to Christmas. In fact, we spend an average of $464 on presents alone.1

For many of us, this puts a major strain on our credit cards. And instead of giving our finances the chance to recover, we continue spending big on summer holidays before being hit with expenses like school fees for the year ahead. 

But with smarter spending decisions, you can start off the new year on the right foot and avoid falling into a debt spiral. Here's how to do it.

1 Set a realistic budget

If you're among the 49% of Australians who don't set a budget for their Christmas purchases, it's easy to deplete your bank balance.2 And once you run out of cash, you're more likely to reach for your credit card or use a buy-now-pay later service like Afterpay to cover your Christmas expenses. 

Setting a budget is the best way to keep your spending under control. First, think of the different categories you'll need to spend money on – for instance, gifts, social events and Christmas Day groceries. Then, allocate a specific amount to each category.

2 Factor in travel expenses

Australians love to travel in summer, whether it's to visit relatives at Christmas or to relax on a beach in January. But remember, the costs can quickly add up.

When you're working out your budget for the Christmas period, take your travel plans into account so the costs don't creep up on you. Start by factoring in all your expenses like flights or fuel, accommodation and insurance. And if you set a spending limit for each day's food and entertainment, it will help you resist the urge to splurge. 

3 Be a savvy Santa

Many Christmas shoppers are tempted to overspend in pursuit of the perfect gift. You can avoid this trap with some upfront communication with your loved ones – for example, by agreeing to a price limit per gift or organising a Secret Santa where everyone just buys for one other person. 

Plus, there are plenty of other ways to keep costs down. You can browse different retailers online to compare prices, or see what's available on auction websites like eBay. You might also pick up some bargains at factory outlets or second-hand stores, or try your hand at making gifts.

4 Track your spending

When you trying to stick to a budget, it's essential to keep a close eye on where your money's going. 

Fortunately, there are plenty of phone apps available from Google Play or the App Store to help you do just that. Some apps can be linked directly to your bank accounts so you can track all your debit and credit card transactions in real time.

By getting a quick snapshot of your spending while you're out and about, you can see when it's time to tighten the reins. And remember, spend-tracking apps aren't just for Christmas; you can use them to keep an eye on your finances throughout the year.

5 Plan ahead for next year

If you're not financially prepared when the festive season rolls around, you're probably more likely to panic-spend. But once you've drawn up a budget for these holidays, you'll also have an idea how much you'll need to cover the same costs next year. You can then start putting money aside throughout the year to avoid overstretching yourself in December. 

One option is to link a high-interest savings account to your everyday account, and then deposit a small amount from each paycheque via direct debit. Without having to think about it, you'll soon build up a cash reserve that could help remove much of your end-of-year financial stress.

Struggling to budget and save? We can provide the guidance you need, not just for Christmas but all year round.

1 Finder.com.au, Christmas spending statistics, 2018

2 Finder.com.au, Christmas spending statistics, 2018