Christmas is all about family, friends and over-indulging, but this can lead to over-spending.

There are ways to make sure you don’t over-spend however, which are both simple and effective.

Set a (realistic) budget

The first thing you should do is to think about how much you want, or can afford, to spend over the Christmas period. And this should include everything from gifts, to the food you are planning on consuming.

Make a list of everything you need and set a price for each. Add this up and if it sounds reasonable, then add 20% as you will probably over-spend or have forgotten something. This will be your budget.

If you cannot afford this amount, think of ways you can cut costs. This could include anything from making something yourself instead of buying it to changing the menu for Christmas lunch to accommodate your budget.

You May Like: 5 Radical Ways to Reduce Your Debt Levels

Stick to the budget

This is the hardest thing to do, but it is important to stick to your budget. You could open a special savings account and place the budget money in that so you know how much you have left.

Limit your gift-giving

There are a couple of ways you can do this. You could introduce Secret Santa (or not-so-secret Santa) for your family. This means you will only be buying one gift, which could save you hundreds of dollars.

You could also do away with gifts altogether and pool you money together to donate to a local charity or Kiva.

After all, Christmas is about catching up with family and friends and having fun, not about what you get.

A homemade Christmas

Try to save some money by making Christmas decorations yourself, and making your own Christmas cards and treats. If you have children, involve them and make it an annual event they will look forward to.

Start saving for next year now

One way to increase your budget for Christmas is to start saving a small amount each and every pay for next year’s holiday season.

After you have calculated your budget above, figure out what you want to spend for next year and divide it by how many pays you get in one year (52 if you get paid weekly, 26 for fortnightly and 12 for monthly), and then put away that much into a Christmas Club account (which will not allow you to withdrawal it until November 1) or an online savings account.

Hide your credit card

Using your credit card over the holiday period can lead to buyer’s remorse and very large bills in January or February, so hide, cut up or freeze your credit card so you aren’t tempted to use it.

Freezing your credit card is a great trick to stop you from using it on a whim. Simply place it in a container of water and place the container in the freezer. This will trap the card in a block of ice and you will have to wait for it to melt (or smash the ice) to gain access to your card. This is a fantastic way to stop any impulse purchases.