How to avoid a post-Christmas financial hangover

by Mackenzie McCarty03 Dec 2012

Recent Newspoll data shows Queenslanders are more stressed about debt than any other state in Australia - but they're certainly not alone.

Suncorp head of advice, Stephen Daly, says that, over the holiday season, there’s a high risk of consumers ending up with a Christmas debt “hangover.”

In fact, he says, the average Australian spends around $1,000 or more on presents and food at Christmas time, which is more than many can afford.

Over the festive season, Daly says many consumers will turn to credit to fund Christmas celebrations:

• 40% of 35 to 49 year olds will use credit to cover expenses they couldn't otherwise afford, even though 60% of them feel stressed over their financial situation;

• 25% of 50 to 64 year olds will use credit to cover expenses, even though 60% of them feel worried about their financial situation.

But Daly says it doesn’t have to be this way. He says there are three major things consumers can do to prevent post-Christmas financial regret:

1. Set a realistic budget within your financial means, and stick to it;

2. Plan ahead for gift purchases – leaving gift buying to the last minute can lead to spending too much in a state of panic;

3. Think about gift buying in the categories of what your loved ones “want”, “need” and “a little luxury” – that way you approach the task of gift-buying in a more considered way.

“These simple tips can mean the difference between blowing out your budget in December, and paying it off over years in high interest, or removing the debt-stress.”

Also, Daly says, it might be a good idea for Australians to re-think Christmas as a special time of year to spend quality time with loved ones, rather than being measured by the amount spent on presents.

“It might seem like a great idea to give your loved one the iPad they’ve always wanted, but if you can’t afford it, the stress of the debt isn’t worth it. Our planners see people in January and debt can often be a cause of unnecessary stress when families over-extend themselves in December.”