The financial pressures of Christmas

It’s the season to be jolly. Well, supposedly. However, for many the financial burden increases stress and anxiety during the Christmas holiday season. There is enormous pressure to spend up large around Christmas, from gift buying to holidays and outings, additional food and drink. Then often comes the post-Christmas blues, marked by crippling debt.


A recent study by the Commission of Financial Capability (CFFC) indicated that the pressure to spend more over Christmas was especially felt by Māori, Pasifika, and people in the younger age group of 18-34. Of those aged 18-34, 32% went into debt over the Christmas period and some of these were still paying back the debt after 3-6 months. The trend continues year after year with Reserve Bank data showing New Zealand's credit card spending peaking every December.


With unmanageable debt comes several outcomes for NZ families. In the 2014 published Family 100 Research, it was apparent that the debt and health of New Zealand families is very much interconnected. From having to neglect their own health due to a lack of money, or to ignore their health-related issues to attend to those of their children instead, families struggle under the heavy burden of debt and poverty. In addition, participants in the study, unable to escape the stress of unmanageable debt talked of experiencing difficult family dynamics, anxiety and depression, and difficulties with social participation and physical health.


The good news is Christmas can still be jolly without adding to financial burdens. The CFFC research found that family time rated as the most enjoyable aspect of the season, followed by the summer weather then time off work. Gift giving and receiving rates way down the list. This gives hope for creating a memorable Christmas season, without the debt.


Money saving tips for the Christmas Season


1. Set a budget.

Write down your current credit and debit, your upcoming usual expenses, then work out what is left to budget with. It may be $0, it may be $200, it may be much more. Break whatever you have up into categories for gifts, food and drink, and outings. For example, with my $200 budget I will spend $80 on Christmas day food, $80 on gifts and $40 on outings. Keep a track of your spending against each of the categories.


2. Manage expectations.

For some there are feelings of social and family obligation. Deeply ingrained may be the expectation or even desire of giving generously. Try to manage expectations with these tips.

• Agree with whānau on dollar limits, or to only buy for children, or perhaps have a ‘secret Santa’ system where each person only buys for one other. Another approach is to have a rule of home-made presents only, or op-shopped gifts only.

• Help your children develop a wish list that is realistic of the budget, or gift them a jar of ‘coupons’. These coupons could be experiences together like going to the public pools or feeding the ducks. You might take the Want-Need-Wear-Read approach. This is where the child gets 4 small gifts, one ‘want’, one ‘need’, one item of clothing and one book to read.

• If you are hosting, invite others for a brunch on Christmas day, rather than full and potentially expensive Christmas dinner. Yummy and home-made pancakes and muffins, French toast and a bowl of seasonal fruit work a treat.


3. Shop with focus.

• Keeping in mind the budget, make a shopping list. Do not go browsing where you might be tempted to deviate from the list and stay clear of stores unless you really must be there. When you do go, take cash, and leave the credit cards behind.

• Consider using a 7-day-rule to avoid compulsive spending. Media and marketing hype making it very tempting to buy immediately for instant gratification. Go home, have a good think about whether you should purchase the item or not, and come back after 7 days only if you deem it still important to buy.

• Plan ahead for the following Christmas, avoiding the cognitive overload and panic buying that comes with last minute shopping.


4. Have fun on a limited budget.

A bit of wizardry comes in when creating magic on a shoestring budget for children. Consider baking treats together, making decorations and crafts from natural resources, take nature walks, watch a home movie with popcorn, play charades, have a picnic and more.