How to avoid a Christmas financial hangover. Photo / 123RF
How to avoid a Christmas financial hangover. Photo / 123RF
Christmas financial hangovers can follow shoppers around into the new year, a budgeting expert says – but they don’t have to.
Rotorua Budget Advisory Service manager Pakanui Tuhura said if shoppers take on debt to pay for things, the costs of Christmas will continue to impact life “long after the fun is over and everyone has gone”.
Tuhura said his Christmas was a time to reaffirm and celebrate relationships with family and friends.
“It’s a time to take a break from the usual, and mentally reflect on the positives in life and the good things that have happened to me during the past year.”
He said helpful things to think about were the main Christmas Day meal, including the menu and the numbers attending.
“Can you afford to do that out of your own pocket, or is it better to have others bring [and pay for] parts of the dinner, or should you alter it to fit what you can afford?”
For people travelling for festivities, costs such as fuel, holiday accommodation and food needed to be considered.
When it comes to buying presents, gift-givers should skip the trends and focus on matching the recipient’s age and personality, and only buying what they could afford.
Rotorua Budget Advisory Service manager Pakanui Tuhura (fourth from the left) with his staff.
He said using Buy-Now, Pay-Later (BNPL) credit could trap people into future debt issues unless they followed the rules.
“Keep it to one purchase at a time, make sure you repay on time, don’t use interest-bearing debt to repay, and make sure the purchase is part of your plan. Planning is the key to not having to use BNPL.”
He said every year clients sought help due to debt created during or as a consequence of the holiday period.
“The holiday period costs and incurred debt repayments affect the money reserves people should have ready to meet school costs and other living costs. So they go into debt again to cover this.
“Basically they get into strife because they didn’t plan for pre-Christmas, during Christmas and post-Christmas.”
Avoiding a financial headache in 2024
Financial Ombudsman Susan Taylor said people needed to be sure they could afford to use the BNPL facilities, as it was still debt that must be repaid once the festive season was over.
“While we know people are facing increasing financial pressures at this time of year, and it is a time of giving, you don’t want to give yourself a headache in the new year.
“If you do miss a payment and penalty fees start being charged, that’s when we see people getting into trouble.”
She said people could also find themselves struggling to pay back other debts, such as car loans, because they prioritise the BNPL payments.
It was important for people to speak to their lender early if they were experiencing hardship.
Tips for a stress-free Christmas
Make a plan and stick to it. Start a supermarket Christmas club early and take advantage of seasonal savings.
Enjoy the free stuff, such as outdoor activities and concerts.
Personalise your Christmas and presents rather than buying on societal trends.
Shop around for food and presents, buying early if the price is low.
Try to have a cash reserve because for every cost you anticipate there will be one you did not during the holiday period.
- Source: Rotorua Budget Advisory Service
Need help?
Financial Services Complaints is a free financial ombudsman service. Call 0800 347 257, or email complaints@fscl.org.nz
Rotorua Budget Advisory Service provides free money management and debt relief advice. Call 0800 420 028 or email rbas@rotoruabudgetadvice.co.nz
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
