CHOICE: Shop  with cash instead of credit.
CHOICE: Shop with cash instead of credit. Rob Wright

Cash is king over Christmas

THE festive season is just around the corner, and plenty of us will be hitting the stores to stock up for Christmas.

Research shows we'll collectively splurge $9.77 billion on gifts alone this year - that's about $539 for each of us, and this doesn't include turkey and all the trimmings.

So it's worth thinking about how you'll manage the cash squeeze to avoid hitting the new year strapped for cash or weighed down by debt.

Christmas is a wonderful time of year but it can also put extra demands on our finances. Getting in early for festive shopping lets you stagger spending over time, which can make things more manageable.

Some very enthusiastic shoppers are doing just that.

Research by Finder shows more than five million Australians started their Christmas shopping in October 2016 or earlier. The real shopping frenzy is expected to peak in early December.

The usual rules of smart shopping apply at Christmas - shop around for a good deal; draw up a purchase list to avoid impulse buys; and hold onto receipts in case Aunty Ethel isn't so keen on the power tools you're planning to put in her Christmas stocking this year.

Important rules also apply to the way we make purchases. In particular, aim to pay with cash or a debit card. It's easy to get caught up in all the pre-Christmas sales and go overboard with spending, however sticking to cash wherever possible means you shouldn't get into too much trouble.

If you don't have the cash, consider lay-by. It may be old fashioned but it's a perfectly acceptable way of buying, and with most retailers you'll pay no extra charges.

A big incentive to choose cash over a credit card is that you'll avoid interest costs - an extra expense that can take the shine off a bargain very quickly.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Literacy Board and chief commentator for Money Magazine.



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