Smart Christmas spending tips: How to avoid the January debt hangover
The festive season is here, bringing sand between toes, more social events, the year-end work break, and of course, gift-giving, food, and fun. For many, this is a highlight of the year. However, all too often, January arrives with a severe spending hangover. According to ASIC's MoneySmart research, Australians expect to spend an average of $783 on gifts, holidays, and celebrations this Christmas.
That gap between intention and reality often triggers the January debt hangover — a burden of credit card bills, Buy Now Pay Later schemes, or holiday debt that extends into the new year. But there are practical steps you can take to enjoy the season, create memories, and stay financially healthy when 01 January, 2026, arrives. Here's how.
1. Set a realistic festive budget and track it
Start by asking yourself how much you can afford to spend this year without compromising your regular commitments, such as mortgage/rent, groceries, utilities, school fees, and insurance. MoneySmart research shows that while 74% of Aussies say they budget for Christmas, only 29% actually stick to their plan (wake-up call: a budget is only useful if you live by it!).
It's helpful to break your budget down into categories:
- Travel/visiting or holidays (if you're going away)
- Gifts (family, friends, coworkers)
- Socialising/entertaining (meals, drinks, outings)
- Decorations and non-essentials (extra trees, lights, accessories)
Allocate each category a dollar amount and treat it like part of your monthly expenses. Then track spending as you go. If you overspend in one category, either reduce spending in another or skip something.
2. Prioritise experiences over expensive presents
In the current economic climate, with interest rates on hold and cost-of-living pressures, spending big simply for the sake of going all out is risky. According to the Research Society's 2024 Xmas Report, while budgets are increasing slightly, 67% of Australians are still looking to save or get bargains.
It's important to stay grounded and think about what really matters – that's the time together, and the memories created. Less can often be more, so consider 'experience' gifts such as a cooking class, a family outing, or a local day trip instead of high-priced items.
You could also agree on gift limits with family and friends, such as having a Secret Santa with a $30 limit. Homemade or 'at-your-service' gifts (think babysitting, cooking dinner, housework, and gardening help) can be highly valued by the recipient — and they cost far less.
By shifting the focus from big spend to meaningful spend, you can still deliver a lovely festive season without blowing the budget and overspending.
3. Use early planning and smart timing
Data from the Australian Retailers Association shows that Australians are increasingly starting Christmas purchases earlier, with 53% of shoppers (70% for those with kids living at home) buying gifts by mid-October in 2024.
Why does this help? Because you avoid last-minute panic buying when prices are inflated, you have more time to compare deals, watch for promotions, and avoid impulse purchases. You can also spread your spending across more pay periods, reducing cash flow pressure.
A helpful tip is to use tools like a spreadsheet or a budgeting app to note when you'll buy what. Mark key events such as Black Friday, Cyber Monday, and December sales, but don't wait exclusively for them — sometimes the right gift at the right price pops up right in front of you.
Try to avoid using Buy Now Pay Later schemes as budget shock absorbers, as these can lead you into the trap of paying for last year's Christmas well into the new year.
4. Be strategic with travel, entertaining and food
The festive season isn't just about presents. Many of us spend heavily on travel (visiting family or holiday getaways) and on food, dining out and entertaining. For example, a survey by Finder Shopping found that last year the average Aussie planned to spend $1,479 on presents, food, alcohol, eating out and travel.
Here are some tactics to reduce that spending burden:
- Travel - book early, choose off-peak dates if possible, stay closer to home or invite guests to you rather than travelling afar
- Dining/entertaining - consider potluck meals, sharing the cost/responsibility among attendees, or limiting the number of formal meals out. Reducing the size of your guest list or simplifying menus in the face of inflation can really help to keep the budget under control
- Decorations & extras - re-use past decorations, skip the upgrades and focus on ambience rather than extravagance
By being savvy across all areas (not just gift-buying), you reduce the risk of a single high-cost purchase pushing you over your budget.
5. Plan for a debt-free January
The post-holiday debt hangover is real. Research reported by news.com.au shows Australians could be carrying around $2.7 billion in Christmas-related debt, with some still paying it off well into the following year.
Some things to watch out for include:
- Credit cards — carrying a balance beyond the repayment period can quickly become expensive
- Buy Now Pay Later (BNPL) services — while convenient, missing repayments can lead to extra charges and multiple repayments falling due at once
- Impulse splurges — those "bonus buys" can snowball into a bigger problem when January bills arrive
To stay on top of things, make sure your spending fits within the cash you have available after regular commitments (and avoid relying on "I'll just pay it off later"). If you do end up with some debt, set a repayment plan for January and consider increasing direct debit payments to clear balances faster. The earlier you act, the less stress you'll face down the track. It's also a good time to review your existing credit arrangements and ensure you're using rewards cards wisely — so they work for you, not against you.
A fresh start after the festive season
The festive season is a time to celebrate, connect, and create memories. It doesn't have to leave you with a financial hangover. With a realistic budget, thoughtful planning, and mindful choices around travel, entertainment, and spending, you can enjoy Christmas to the fullest and step into January feeling confident rather than stressed. Remember, the new year is about renewal and fresh starts — not recovering from holiday overspending.
At Safe Financial, we believe festive spending should add value to your life, not burden it. A prudent approach now can lead to a clearer, brighter start to the new year.
Still, we understand how quickly holiday expenses can add up. Our fast, flexible cash loans of up to $5,000 can help by consolidating Christmas costs into a single easy repayment. With our easy online application, same‑day approvals in many cases, and transparent terms, our friendly team can help you regain control quickly and confidently — so you can start 2026 fresh and focused on what truly matters.