Financial wellbeing is a gift worth giving yourself

The festive season is a time of joy and celebration, but for some, it can also lead to a financial hangover in the New Year. Overspending on gifts, parties, and decorations can quickly add up, leaving many of us with unwanted debt. In 2022, Australians spent more than $66.7 billion during the pre-Christmas sales in preparation for the festive season. The rising cost of goods and services means that even though many are trying to curb their spending, it is expected that we will spend a little extra this year. Here are some tips to help you manage holiday season debt and boost your financial wellbeing in the New Year.

Tackle any debt ASAP

With many household budgets feeling the pinch due to rising housing, power, petrol, and other costs, debts may already be increasing. But if you are feeling burdened with debt after the Christmas period, don’t wait until it grows to unmanageable levels.

One option to consider is to consolidate your high-interest debts into a single manageable loan. This approach can simplify repayments and potentially reduce interest rates, making it easier to eliminate debt over time. However, it is important to do your calculations carefully to ensure it is worthwhile and then be vigilant about future spending.

Another option is to take a cold, hard look at your expenses. Is there something that can be cut back, and that money diverted to repaying debt? Any reduction in your debt load will help, no matter how small. Some people like to implement the snowball method in tackling their debts. While continuing to make the minimum repayments on all your debts, pay a little extra on the smallest debt to pay it off faster. Knocking over your smaller debts can help inspire you to continue.

Start preparing for the next holiday season

1. Create a Christmas budget – A budget is an effective way of controlling spending. It may not sound like fun, but it helps you understand what you would like to spend and how much debt you are prepared to live with. List all the costs you can think of (gifts, decorations, food, travel, and entertainment), then set limits for each category and stick to them diligently. Consider using budgeting apps or spreadsheets to track your expenses and ensure you stay on track.
2. Embrace the spirit of giving – Instead of buying individual gifts for every family member or friend, organize a Kris Kringle or Secret Santa gift exchange. This not only reduces the financial burden for everyone but also adds an element of surprise and excitement to the holiday festivities.
3. Take advantage of sales and discounts – Begin your Christmas shopping early to take advantage of sales and discounts. Stockpiling non-perishable food items and other essentials before prices rise closer to Christmas can deliver significant savings.
4. Online shopping – You can often find better prices by shopping around online, and various third-party websites offer cash back or rewards not available in-store.
5. DIY and personalised gifts – Tap into your creativity by making your own gifts. Handmade gifts can be a welcome and thoughtful way of giving. Consider creating homemade cards, photo albums, or baking treats for loved ones.

Taking control of Christmas spending and debt is crucial for starting the New Year on a positive financial note. So, start planning early, know what you can afford to spend, and prioritise your financial well-being for a debt-free and stress-free new year. Contact our wealth team today to discuss strategies to regain control of your financial future and improve your financial wellbeing.