6 Steps to Prevent a Christmas Debt Hangover

Have you ever started a New Year with a debt hangover from the previous year’s gift giving season? I know I certainly have! This is the time of year when everyone’s credit card gets put into overdrive getting ready for Christmas and with the end of 2020 in sight, people are talking about celebrating Christmas this year more than ever.  

But starting the New Year with debt from the silly season is far from ideal. Some research on our spending in 2019 by Finder.com found that in NSW, the average spend at Christmas was $1,223. This is extra expenditure on top of the day-to-day expenses we all have.

Christmas will be here before we know it, so it is crucial that you start planning ahead now for all the spending that is going to take place over the next six weeks.

To help you start the New Year financially healthy I am going to run through 6 ways you can prevent a Christmas debt hangover:

1. Make a list and check it twice

39% of us don’t actually track where our Christmas spending goes! So, make a list of all the presents you need to buy and all the things that you will need at Christmas time. Then, start allocating a dollar amount to each one of these items so that you have a Christmas budget you can try to stick to. This list will help you feel organised, focussed and in control this Christmas and ideally help stop any overspending.

2. Shop online

Shopping online can potentially help save you money on your purchases as you can compare prices, potentially purchase items cheaper than in a traditional retail store and also help avoid those impulse buys that can occur while shopping in your local Westfield’s or shopping centre. Just be mindful of postage costs as these can add up if you are buying from a few different providers.

3. Kris Kringle

A great way to save money at this time of year is to organise a Secret Santa/Kris Kringle gift giving tradition with family or friends. Set a gift cost with everyone, draw names out of a hat and each person will now only have to buy one present rather than one for every person. If you are buying for every person instead, make sure you all set agreed price limits on your gifts for each other.

4. Re-gifting

Do you have any new items that you received as a gift and have no need for? If you do and you know that it’s something that a friend or family member would love, you should consider gifting it to them.

5. Pre-Christmas and Post-Christmas sales

The number of retailers offering pre-Christmas and Black Friday sales has grown enormously in the last couple of years and with retailers doing it tough this year, there are sure to be some strong discounts to get you through the door and spending or online shopping this season. Be prepared and know what you need to buy beforehand so that you can jump on the Hot Offers available in these events. If you can wait to make your purchases after Christmas, the sales offers from Boxing Day onwards are usually significant! There are plenty of savings to be made if you can exchange presents with your friends or family members after Boxing Day. It might not be appropriate for you but there is no better feeling than paying less than full price.

6. Start saving for next year as early as possible

5.4 million of us in Australia use our credit cards to fund the costs of Christmas. To avoid having to do this, once you get through the silly season (and hopefully you can do this without a debt hangover), start thinking about next Christmas as early as possible. It sounds great in theory but people rarely do it. As I have outlined in the steps above, the best way to get through this time of year is to plan ahead and set a budget for all of your expenses. The part I left out because we are only a few weeks away was to start saving now for this time of year even if it is only a small amount. Start putting some funds aside into an account for next year’s silly season or set yourself a fun savings challenge such as the infamous ‘Coke bottle’ challenge and you will definitely be able to prevent a debt hangover – and start the new year financially healthy!

This is a very expensive time of year for everyone. First there are the gifts, then there are all the get togethers which require money for food and drink and then you might be having time off or going on holidays. All these social and festive activities usually lead to your most expensive month of the year. So, if you can use the 6 steps outlined here today to plan ahead for this time of year, you can make sure that you don’t start the New Year with a debt hangover!

We hope you enjoy a covid-safe Christmas and New Year season with your family and friends.

Ryan Porter is a Wealth Coach at Catalyst Wealth Group. His mission is to help his clients achieve financial success and live their ideal life.

Any advice or information in this publication is of a general nature only and has not taken into account your personal circumstances, needs or objectives. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.

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