The year-end rush is here. For expats, this marks the home stretch: buying gifts, traveling home or elsewhere, whether alone or with family. How can you budget for these expenses to avoid unpleasant surprises and a dent in your year-end finances? Here are some practical tips.
Christmas bonuses and incentives
Are you expecting a Christmas bonus or other incentives? Whether provided by the host country (Christmas bonus) or by the company (13th-month salary, year-end bonus), these bonuses offer a welcome boost to your end-of-year budget. Typically, Christmas bonuses from states are regarded as exceptional aid, thus reserved for modest households living in the territory and meeting certain eligibility conditions. On the other hand, company bonuses follow different criteria established by the employer within the boundaries of the law.
Budgeting with or without a bonus
Planning ahead is crucial. Are you sure you will receive any aid or bonus this year? If it's a bonus guaranteed by your company and outlined in your employment contract, your employer is obligated to provide it. Otherwise, they have the discretion to decide. Also, keep an eye on the payment dates for state aid. If you were counting on this to fund your year-end purchases, you might be surprised if it arrives too late.
Many expats prefer to plan as if they will not receive any bonuses. Indeed, this approach is a prudent way to finalize their budget several months in advance. Assess whether your current budget can cover your plans (traveling home, buying gifts for your children and relatives, etc.). If you are planning to fly or take the train, you have probably already booked your tickets. This is all the more reason to set your budget without depending on any state aid or a potential 13th-month salary. In the event of a tight budget, this gives you time to prioritize and focus on what is essential. For the holidays, "travel" expenses can be significant, especially when traveling with family. It's still possible to adjust: perhaps focus solely on the family trip and reduce spending on gifts, or opt to stay in your country of expatriation instead of going home.
Another benefit of this method is that any Christmas bonus or additional bonus becomes your end-of-year gift to yourself. You can then take advantage of New Year's sales or set aside funds for another project. Here's a look at some countries that offer a Christmas bonus or end-of-year bonus.
France
You are eligible for the Christmas bonus if you receive one of these three social benefits: Active Solidarity Income (RSA), Specific Solidarity Allowance (ASS), or Equivalent Retirement Allowance (AER).
Entrepreneurs who received the ASS and also benefited from business creation aid (ACCRE) are eligible to receive the Christmas bonus as well. You do not need to do anything; the bonus will be directly deposited into your bank account around December 16. If your social benefits commenced in December, expect payment in January 2025. The amount of the Christmas bonus varies depending on your household composition (single or not, with or without children), the allowance received, and your income. Amounts range from about 152 euros for a single person to 532 euros for a single parent with four children.
United Kingdom
The Christmas bonus is a non-taxable payment of £10, reserved for those receiving social benefits and residing on British territory during the designated "reference week" (usually the first week of December). To qualify, you must have been receiving one of the 22 benefits provided by the British government during this week, such as adult disability pension, child disability pension, widowed parent's allowance, caregiver's aid, among others. If eligible, you don't need to take any action; the Christmas bonus will be automatically applied. Specific provisions are in place for British expatriates.
Australia
Unlike France and the UK, the Australian government does not offer Christmas bonuses. Instead, it has implemented a series of measures to assist modest households in managing their budgets throughout the year. One such initiative is the ACT government scheme, designed to help eligible households with the cost of living. This assistance includes up to AUD 800 in energy bill support, access to medical care including free, appointment-free time slots, as well as aid with transport, rent, and home purchases. Various other local aids are available across Australian states. The government website Services Australia outlines the different aids available for eligible residents, including students, parents, workers, the unemployed, and retirees. Similarly, New Zealand does not provide a specific Christmas bonus but offers allowances to support families in need.
Receiving a bonus or Christmas gift from your employer
In New Zealand, as in many other countries, the law regulates bonuses paid by companies to employees. Unlike state aids, which are based on income conditions, company bonuses may be linked to an employee's performance throughout the year or during a "key moment", such as achieving good monthly or quarterly results. However, employers are free to award a bonus to all their employees at the end of the year, or they may choose to give a Christmas gift instead. The distinction for the company is at the fiscal level, where, depending on the country's law, the bonus may be subject to social contributions.
Many countries, including Switzerland, France, Australia, South Korea, Germany, South Africa, Morocco, the United Arab Emirates (UAE), and the United States, allow bonuses to be paid directly to employees. However, the issuance of these bonuses is optional and depends on your collective agreement and employment contract. If your contract specifies a 13th-month salary, your employer is obligated to pay it.
Defining your budget for Christmas gift
Whether you will spend more or less, the budget for year-end gifts varies by country and tends to be either generous or modest.
In Canada, people tend to splurge, with an average of CAD 1,853 allocated for end-of-year festivities, of which CAD 779 are specifically for gifts. This represents a 13% increase from 2023. The "end-of-year" budget varies across provinces: CAD 2,126 in British Columbia, compared to "only" CAD 1,474 in Quebec.
In the United States, the average year-end budget is about USD 1,638, up 7% from last year. This budget includes gifts (ranging from USD 200 to USD 300), entertainment, and travel. With the end of the health crisis, there's a notable increase in travel plans, and people are less inclined to cut back on the "gift" budget to afford a nice year-end trip. In contrast, the British are more likely to spend on gifts for others, with travel ranking third after food purchases. They plan to spend about £ 600 on their end-of-year festivities, with gifts for themselves coming in last.
However, in both the United States and the United Kingdom, a portion of the population will spend far less than these averages. Ongoing economic challenges continue to impact budgets and necessitate trade-offs. This is true in other countries as well. Budgets are averages and may not reflect everyone's reality.
Who should you gift?
Are you more of a generous expat? Sharing your expat life (and/or the culture of your home country) with loved ones often intensifies during the festive season. Children, parents, close family, friends, colleagues, neighbors—the list of potential gift recipients can be extensive. What are the common practices in your host country? In your company, is it customary to exchange gifts among colleagues? Would you choose a group gift for the team or individual gifts for each colleague?
To sidestep any office gift-giving faux pas, it's wise to understand the norms early on. In Japan, for instance, the presentation of a gift is as important as the gift itself. The wrapping should be meticulous. While lavish gifts are frowned upon, it is considered appropriate to give a slightly more expensive gift to a superior than to peers.
To manage your budget effectively, you might need to make some trade-offs. Start by creating a list of people you absolutely must not forget during the festive season. Allocate a budget for each "category" of recipients (family, friends, colleagues, etc.). For gifts for loved ones back home, consider small items from your host country—these ensure a significant impact at a minimal cost. If you're artistically inclined, why not embrace DIY projects? This original and cost-effective approach allows your creativity to shine through.
Black Friday, Christmas sales: What can you get the best deals?
Consider strategizing around sales periods to manage your budget and secure significant savings effectively. Many savvy expats begin accumulating gifts several weeks, or even months, in advance, recognizing that attractive deals are not limited to the year-end season. However, the festive season itself also offers notable discounts. Black Friday, renowned worldwide, officially falls on November 29, but many retailers kick off their discounts early. For a twist on tradition, why not extend your gift shopping beyond December 31? Waiting until January can also yield excellent bargains. Let's explore these opportunities for good deals.
South Africa
In South Africa, the Black Friday period generates over 85 billion rands in sales, with this year's figures anticipated to exceed previous records. Purchases predominantly include clothing and shoes, followed by furniture and household appliances, with food and luxury items also ranking high. Buying trends remain aligned with items popular during the holiday season. Online Black Friday specials have already begun. Takealot, one of South Africa's largest online retailers, is offering discounts of up to 50% for Black Friday. If you're searching for unique gifts, consider visiting the Mall of Africa in Midrand, located in the north, or AAFRICAA in Cape Town, in the south, for a diverse shopping experience.
Japan
Why give gifts at the end of December when you could wait until January? For those looking to treat themselves or others, consider the fukubukuro. This concept is so popular in Japan that many people queue for hours outside the most coveted stores. "Fukubukuro" translates to "lucky bag," and the idea is straightforward: capitalize on promotions launched by Japanese stores starting January 1st to snag great deals.
The contents of a fukubukuro remain a mystery until you open it; only the price is known beforehand. However, you typically have an idea of the type of products to expect based on the store, which is part of the allure. These bags can contain high-value items sold at a fraction of their original price, making high-tech stores particularly popular venues. Smartphones, computers, and video game consoles might be found at dramatically reduced prices. Some stores even entice customers by advertising that the fukubukuro contains items worth 2 to 4 times its purchase price. This makes a compelling case for delaying purchases until January. However, be prepared to gamble a bit and possibly sacrifice some sleep to land the best deals, as in high-tech stores, fukubukuros can sell out within minutes.
Morocco
In Morocco, the winter sales are scheduled from January 8 to February 4, 2025. This offers expats two strategic gift-giving options: either give belated gifts purchased at a discount or plan ahead using the summer sales for timely year-end gifts. For those who do not want to arrive empty-handed at year-end celebrations, a viable strategy is to give a small gift in December followed by a more substantial one in January. This approach not only provides financial flexibility but also extends the festive spirit into the new year.
It's important to remember that while Morocco celebrates the Gregorian New Year on January 1st, the Muslim New Year, or the day of the Hijri year, is also observed. The date of this celebration, determined by the lunar calendar, varies annually, adding another layer of cultural significance to this period.
China
The Chinese New Year, also based on the lunar calendar, typically occurs between January and February. This period marks the beginning of the holiday season, characterized by family reunions in one's hometown and a surge in consumer spending. Before the Chinese New Year, consumers often stock up on gifts, presenting a prime opportunity for you to benefit from promotional deals.
However, with some foresight, you might have already capitalized on the Singles' Day sales, which occur at the end of October in China. Singles' Day is one of the largest shopping festivals in the country, where stores aim to clear out their inventory. Despite its name suggesting a focus on single individuals, the day attracts many shoppers looking to snag great deals. This event is an excellent chance to purchase gifts and other items at significantly reduced prices, well before the holiday rush.
United Arab Emirates – Dubai
For your last-minute end-of-year shopping as an expat in Dubai, don't miss the Dubai Shopping Festival. Running from December 6 to January 12, 2025, this favorite expat hub is celebrating the 30th edition of its renowned shopping festival. The event showcases both artists and merchants, featuring promotions from over 800 local and international brands. This festival is a fantastic opportunity to enjoy substantial savings while finding unique souvenirs to delight your loved ones.
How to spend without breaking the bank
As the year draws to a close, the first questions to consider are: how much can you realistically set aside for the festivities? Do you want to prioritize spending on your loved ones and yourself or strike a 50/50 balance? A strategic approach is to allocate your budget across different expense categories.
Do not count on your Christmas bonus as part of your initial budget; treat it as a bonus only when its receipt is guaranteed. Consider whether you'll be traveling or staying in your host country. If traveling, will you return home or explore a new region or country? In both scenarios, the travel costs will significantly impact your end-of-year budget, particularly if you are traveling with family or friends. If the timing isn't an issue, consider traveling after the holidays to cut costs substantially.
Anticipation is crucial for managing your year-end expenses effectively. Have you already booked your plane or train tickets? Similarly, when it comes to gift-giving, don't wait until the last moment to start your shopping. Year-end promotions often lead to high demand and stock shortages. To avoid disappointment, it's wise to make your purchases several weeks, or even months, in advance.
