Christmas is around the corner and I have put together some key tips to avoid common financial pitfalls that arise during the holiday season.

The first and probably most important tip is to establish a budget, estimating your income and expenditure over the Christmas break, with the key ingredients being presents, entertainment and travel.

By sticking to spending goals and having control over an established budget, you will avoid unnecessary financial stress.  Budgeting will also help you free up some extra cash to celebrate with your loved ones.

The Christmas season is also well known for over-spending on credit cards. The Reserve Bank of Australia’s latest data tells us that almost $51 billion is currently owed on credit cards – that’s an average of around $3,135 per card holder.

If you are going into the Christmas season with outstanding debts on your card, it is even more important to rein in spending and attempt to make your monthly repayment more than the minimum amount.

Still remembering your indulgent Christmas by the time Easter comes around is preventable, as are unexpected events such as theft, lost luggage, or damage to your house or apartment. By making sure you are fully insured for your travel, home and contents, you can feel a little more comfortable and less pain in the wallet if a problem occurs.

For families, Christmas can be a great time to encourage children to save money and take control over their finances. If they score a casual holiday job or do chores around the home for pocket money, it is a good idea to put some of their earnings aside and set up goal savings account.

These are important steps in educating them about the power of saving and budgeting.

So this Christmas, make your wish list to Santa more affordable and enjoy a profitable holiday season.

Source: Aussie Home Loans

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