18th December 2013 – Financial Counselling Australia: Avoid a financial hangover this Christmas.

The real price of an expensive Christmas gift can be financial stress, says Financial Counselling Australia.

Technology transcends income levels and with iPads, play stations, electronic games and other technology-driven items at the top of many Christmas “wish lists”, the pressure on families to spend up big at this time of year can be overwhelming. This Christmas financial counsellors are warning that spending more than you can afford at Christmas is a sure-fire way to create financial stress.

“There can be real pressure from family and friends to spend up big at Christmas,” said Fiona Guthrie, Executive Director of Financial Counselling Australia. “Kids will often try their luck for expensive presents – it’s amazing how often ‘everyone’ else in the school class has the latest and greatest piece of technology. Friends can unwittingly apply pressure via lots of pre-Christmas parties and even the Christmas Day lunch can be a lot more expensive than it has to be. There are so many ways that our money can disappear at Christmas and unfortunately it can lead to a nasty credit card bill in January that families may then struggle with for months later.”

FCA nominates gifts, food and entertainment as three of the biggest areas of expenditure and offers the following tips for all households:

  • Be realistic about your gift-spending budget. It’s easy to get carried away when buying gifts, particularly if shopping is left until the last minute. Take the attitude that if you can’t pay cash, you can’t afford it  – and manage your family’s expectations accordingly.
  • Don’t feel guilty. Kids may be disappointed not to receive an expensive item – but being honest with them about your financial situation and working out a budget together will be a far better long-term experience for them than living beyond your means.
  • Plan a simpler meal. According to data from industry research group IBISWorld, Australians are expected to spend approximately $10.6 billion on food alone this Christmas. “Food is expensive and Christmas tends to be a day of over-catering,” said Ms Guthrie. “Families could potentially save a significant amount by planning the Christmas lunch carefully this year.”
  • Go easy on the pre-Christmas celebrating. It’s fun to catch up with friends in December, but it doesn’t need to be an expensive night.

“The amount that households can spend on Christmas depends, in part, on how much they earn,’ said Ms Guthrie. “When deciding how much to spend, all households should think ahead to January and to what expenses will be coming up in that month. It may be school fees or school clothes and books, or it may be car registration, council rates, the electricity bill – just to name a few. Spending all your money on Christmas can leave you short of funds in January and with the average credit card interest rate being just over seventeen percent, you do not want to play personal debt catch-up in 2014.”

Anyone who is in financial difficulty can contact a free and independent financial counsellor on 1800 007 007 or visit www.debtselfhelp.org.au. 

For further comment please contact:  Fiona Guthrie 0402 426 835