Don’t overspend this Christmas

The holiday season is generally a joyous time filled with festivities, cherished moments and the spirit of giving. However, it's easy to get caught up in the excitement and overspend, leading to debt that lingers long after the celebrations are over. In Australia and New Zealand, where credit debt is already a significant concern, it's important to approach the holidays with a thoughtful and disciplined mindset, if you want to ensure you don’t have a Christmas debt to pay off in the new year. 

Understanding the issue: high credit debt in Australia and New Zealand 

Before delving into strategies for managing holiday spending, let's take a closer look at the current credit debt situation in Australia and New Zealand. According to recent data from the Reserve Bank of Australia¹, the total credit card debt in Australia has risen $270m to $17.75 billion in February 2023. In New Zealand, the NZ Reserve Bank², total credit card debt is $6.11 billion in June 2023.  Holiday spending can contribute considerably to increased credit debt. 

Setting a budget and sticking to it  

One of the most effective ways to manage your Christmas spending is to set a realistic budget. Begin by evaluating your financial situation and deciding how much you can comfortably allocate for holiday expenses, without compromising your situation. This includes spending on gifts, decorations, travel and any other holiday related costs. 

To put this into perspective, according to Finder³, the average Australians spent $1,361 on Christmas presents, food, alcohol, travel and eating out. Additionally, Finder revealed in December 2022 that 24 per cent of people were reliant on credit to cover costs over the Christmas period – that’s 4.8 million Australians.   

Making thoughtful gift choices 

Gift-giving is a central aspect of holiday celebrations, but it's essential to approach it thoughtfully and sensibly. Instead of feeling pressured to spend beyond your means, it’s a good idea to focus on heartfelt gestures and meaningful presents that align with your budget. This might involve discussing gift-giving limits with family and friends or opting for creative, budget-friendly alternatives like homemade treats or personalised gifts. 

An article published by the New Zealand Herald⁴ highlights that over a third of Kiwis plan to spend less on gifts during the holidays. This sentiment reflects a growing awareness of the importance of staying within financial limits while still expressing love and appreciation. 

Spending less doesn’t have to mean sacrificing joy 

The holiday season doesn't have to be synonymous with extravagance. You can embrace the spirit of spending less by finding ways to enjoy the festivities without overspending. Host a dinner, participate in DIY decorations, or explore local holiday events that are either free or have minimal entry fees. A study by the Australian Retailers Association⁵ found that more than 70% of Australians appreciate experiences over material gifts. This underscores the significance of shared moments and memories over expensive presents. 

Taking advantage of sales and discounts 

Timing your holiday shopping strategically can also make a significant difference in managing your spending. Keep an eye out for seasonal sales, promotions and discounts that can help stretch your budget further. Black Friday, Cyber Monday and pre-Christmas sales are great opportunities to snag deals on gifts and other holiday essentials. 

The Australian Bureau of Statistics⁶ reporting in January 2023 that the Black Friday sales helped increase retail sales by 1.4%, which indicates that lots of people are taking advantage of the sale opportunity.  Similarly, the NZ Herald⁷ reported that spending on Black Friday sales in New Zealand has increased over the last two years, as more people take advantage of the sale.   

Conclusion 

As the holiday season approaches, it's important to remember that celebrating with loved ones doesn't require overspending or incurring unnecessary debt. Australia and New Zealand are already grappling with high credit debt levels, making it more important to approach holiday spending thoughtfully. By setting a budget, making thoughtful gift choices, embracing frugality and taking advantage of sales, can help ensure a debt-free start to the new year, while still enjoying the spirit of the holidays. 

Remember, the true essence of the holiday season lies in the joy of togetherness and meaningful connections—not in material excess. By staying mindful of your spending and focusing on what truly matters, you can create lasting memories while limiting the burden of financial stress.