Christmas is a magical time of the year, but between the joy of giving and taking that much-needed holiday break, it’s easy to overspend. With rising living costs and financial pressures continuing to challenge household budgets, the New Year could potentially bring a financial hangover. But it doesn’t have to be that way. With some planning and the right tools, you can protect your income this holiday season without sacrificing the festive cheer.
While economic conditions remain tight and inflation levels are still above target, many are looking to next year for potential relief. Until then, it’s crucial to focus on what you can control – whether that’s smarter budgeting, managing debt, or finding ways to stretch your income further.
Having an affordable and joyful Christmas
This time of year can be the best time of year for some like my youngest daughter who always can be relied upon to decorate the tree and to give me her wish list well ahead of December to ensure that her gifts will arrive on time to be wrapped under the tree.
It’s also the end of the year, and into the mix of great holiday expectations, come extra costs, social pressures and expectations. For some, this season can also bring family tensions to the surface, so there can be a sense of both joy and, well, a little bit of dread.
Here are some tips to propel you towards a merry end of year:
- Have in mind what your hopes are for work and family gatherings this year and where your limits are. Communicating these expectations earlier and discussing them well ahead of time will help to avoid overcommitting to too many Christmas events.
- Look out for free or low-cost events in your area such as carol singing, faith gatherings, markets and light displays. This can get you into the holiday spirit without overspending.
- Have a focus on what really matters to you and your loved ones – shared traditions or outings can often mean more than physical presents.
- If you usually host holiday gatherings, share the load! Delegate to those around you and let guests know what they can bring or help with on the day.
- A Secret Santa or a gift exchange reduces the number of gifts you need to buy while keeping the fun of giving. Everyone in your circle can benefit from this practice as it’s likely they might be feeling the same pressures.
- Plan meals wisely, go for foods that are crowd pleasers, and keep things simple where possible for less stress on the day.
Centrelink Payment and Reporting
Services Australia offices and call centres do close for Christmas and New year public holidays. That means your reporting and payment dates may change and you’ll need to report early – you can see your new reporting date in your online account.
Interest rates and managing credit wisely
The holiday season is a time of giving, but it can also lead to a credit card debt that lingers after the festivities are over. Managing your credit wisely can put you in control and reduce your financial stress as the New Year begins.
- Start with a plan: Before you start shopping, have a budget to determine how much you can afford to spend this year. Tools like the Retirement Essentials Safe Spending Calculator can help you see the impact of spending more than your usual expenses.
- Prioritise paying off debt: If you already have credit card balances, consider a strategy that works best for you:
- Paying off smaller debts first: This can give you a quick win and boost your confidence.
- Targeting high-interest debt: Reducing these balances first can save you more in the long run.
- Stay within your credit limit: Avoid spending more than your credit limit, which can trigger penalty fees and impact your credit score. The aim is to pay off the amount you owe before the due date so that you do not incur unwanted interest.
- Track your spending: Keep an eye on holiday purchases to ensure you’re staying within your budget.
- Think twice about Buy Now, Pay Later (BNPL) Options: While convenient, BNPL services can lead to overspending and financial strain if not repaid on time. As with credit cards, only use them if you are certain the repayments fit within your budget.
Helpful resources
If credit card debt or financial stress feels overwhelming, there are support options available:
- Beyond Blue provides tools and support for managing stress and anxiety, including financial stress.
- Money Smart offers guidance on budgeting, managing debt, and planning for financial security.
- The National Debt Helpline gives free, confidential advice to help you retain control over your finances and prioritise debt repayment strategies.
By taking proactive steps, such as working out your budget before you walk out the door to shop or add to a shopping cart, and monitoring your spending, you can enjoy the festive season with less worry and more confidence about your finances.
Planning for your financial future
This Christmas, give yourself the gift of financial peace of mind. Speak with one of our Retirement Essentials advisers and start planning for the retirement that you envision.
Here’s some of what we can do for you in a guided review of your income possibilities:
- Retirement Forecasting (Compare two scenarios of how your assets and income will look during your retirement journey).
- Understanding more about super (Assess the options to help make your super work better for you).
- Maximising your entitlements (Assess any changes you might be able to make to maximise your Centrelink entitlements)
By focusing on what you can control – your spending and planning – you can enjoy the festive season with confidence and peace of mind.
