As the holiday season approaches, many of us are preparing for the celebrations that make Christmas the most wonderful time of the year. However, with all the joy it brings, it also comes with its share of financial stress. Between gifts, meals, travel, and unexpected costs, the holiday season can lead to an unwelcome surprise in your credit card statement come January.

The obvious expenses are easy to predict: presents, holiday meals, travel, and social events. However, there are many hidden costs—little expenses that quickly add up and could leave you feeling financially drained as you enter the new year. But fear not, with some careful planning, you can enjoy a stress-free holiday season without breaking the bank.

One key way to stay on top of your spending is by maintaining a tailored budget for each month, especially for December. If you haven’t started budgeting yet, don’t worry; it’s not too late to begin, and the benefits far outweigh any initial challenges.

Here are some tips to help you budget effectively this December:

1. Focus on the Essentials First
   Before you dive into festive spending, make sure your basic expenses are covered. These include rent or mortgage payments, utility bills, transportation costs, and groceries. These are non-negotiable and should be your first priority. Once you’ve accounted for these essentials, you'll have a clear picture of what’s left to allocate to the festive season.
2. Plan for Christmas Gifts
   If you haven’t set aside money for Christmas presents yet, now is the time to allocate a specific budget for gifts. Many people go into debt during the holidays, but it’s important to avoid that trap. Stick to spending what you can afford, and remember—your loved ones will appreciate the thoughtfulness behind your gifts, not the price tag. Also, don't forget to factor in additional grocery costs for holiday meals and any travel expenses to visit family or friends.
3. Keep Track of Smaller Expenses
   December can be a whirlwind of social events, school activities, and work parties, which often come with a price tag. Whether it’s a teacher’s gift, an office party ticket, or drinks with friends, these smaller expenses can add up quickly. Use a planner or calendar to mark key dates and estimate associated costs so you’re not caught off guard.
4. Make the Most of Your Sundays
   With the busy holiday season, it’s easy to fall out of regular habits like meal prepping. However, taking a couple of hours on the weekend to prepare meals in advance can save you time and money. In 2023, the average Australian household spent $60 a week on food delivery services. If you skip this expense for the month, you could save over $200—simply by taking an hour to cook in advance.
5. Consider a Dry December
   For many, alcohol is a staple at holiday gatherings, but it’s also a significant expense. In 2023, Australian households spent an average of $53 per week on alcohol, and December expenses can be even higher. By choosing to take a break from drinking, not only will you save money, but you’ll also reduce the costs associated with transportation, such as taxis or rideshares. If you’re able to avoid alcohol for the month, you could save over $200.
6. Don’t Forget About New Year’s Eve
   While the focus is usually on Christmas, don’t overlook New Year’s Eve when planning your budget. Whether you’re attending a party, hosting a gathering, or enjoying a quiet night in, budgeting for these plans ensures you’re aware of your finances as the year comes to a close. A little preparation now will help you ring in the new year with financial peace of mind.

By following these tips and creating a monthly budget that accounts for both big and small expenses, you can enjoy the holidays without stressing about your finances. With a bit of planning, you’ll enter the new year feeling confident and in control of your money.