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New research from ASIC’s Moneysmart has revealed that Australians are set to spend an average of nearly $800 each on gifts, holidays, and celebrations this Christmas, with many facing the risk of a post-Christmas spending hangover.
The research showed that 74 per cent of people set a budget for Christmas, yet more than four in 10 (44 per cent) have regretted their spending in previous years. Just 29 per cent manage to stick to their plan, with savings; credit cards; and buy now, pay later (BNPL) services commonly used to fund the festive season.
Despite efforts to keep spending under control, around one-third of Australians (35 per cent) intend to reduce their spending this year compared to 2023. However, 49 per cent plan to spend the same as last year and a significant 16 per cent expect to spend more this Christmas.
ASIC commissioner Alan Kirkland said that although many consumers intend to be cautious with their spending, the research highlighted that many are still willing to exceed their budgets during the festive season, which can lead to financial strain.
“Although many plan to be careful with their cash, the research shows many others are willing to blow their budget at this time of year. This can lead to costly decisions, such as putting too much on credit or entering into high interest debt,” Kirkland said.
“When it comes to buying gifts, it really is the thought that counts – plan your spending, stick to your budget, and avoid entering into high interest debt.”
He also pointed out the challenges of sticking to a budget during the festive season, especially with numerous sales and Boxing Day events creating pressure to spend more than initially planned.
“If you do find yourself with too much debt, there are steps you can take to get back in control. This includes setting up a repayment plan, credit card balance transfers, or, if you are unable to make repayments, applying for financial hardship assistance through your bank or credit provider,” Kirkland said.
“ASIC’s Moneysmart website has information and support to help Australians avoid a post-Christmas spending hangover and get their debt under control.”
Aussies’ Christmas spending plans
On average, Australians estimate they will spend $783 on Christmas this year. Nearly half (46 per cent) plan to spend less than $500, 21 per cent expect to spend between $500 and $999, while 34 per cent of Aussies are planning to spend $1,000 or more.
While 35 per cent of people indicated they plan to spend less this year, 49 per cent said they would spend the same as last year and 16 per cent planned to spend more than in 2023. Among those planning to reduce their spending, the areas people plan to cut back on include gifts (47 per cent), holidays (39 per cent), and decorations (38 per cent).
Men are more likely than women to plan to spend big, with 39 per cent of men indicating they will spend $1,000 or more compared to 29 per cent of women. Millennials are also expected to outspend Baby Boomers this year, with an estimated spend of $937 compared to $679.
Budgeting for Christmas
When it comes to budgeting, 74 per cent of Australians claim to set a budget for their Christmas spending, although only 29 per cent of these people tend to budget every last cent and stick to it.
Millennials are more likely than Baby Boomers to budget for Christmas, with 78 per cent of Millennials compared to 71 per cent of Baby Boomers planning to set a budget. In a comparison of younger generations, Millennials are also more likely than Gen Z to stick to a budget, with 32 per cent of Millennials budgeting every cent compared to just 20 per cent of Gen Z.
Funding Christmas spending
This year, 75 per cent of Australians are planning to fund their Christmas spending at least partially through savings, while 31 per cent will rely on credit cards and 16 per cent on buy now, pay later (BNPL) services.
Although BNPL services make up a smaller proportion of overall spending, they are used across generations, with 24 per cent of Millennials, 20 per cent of Gen X, 12 per cent of Gen Z, and 10 per cent of Baby Boomers indicating they may use them.
Millennials (81 per cent) and Baby Boomers (76 per cent) are most likely to use savings to fund their spending, while Gen Z (39 per cent) and Millennials (41 per cent) are more likely to use credit cards.
Post-Christmas regret
Looking ahead to post-Christmas, around three in 10 Australians (28 per cent) have indicated they regret their Christmas spending and struggle to pay it off. However, almost half (45 per cent) said they have never regretted their spending.
For those who do regret their spending, the research revealed that it would take nearly four months (3.68 months) to pay off a $1,000 debt, meaning many could still be paying off their Christmas expenses well into the following year, possibly even around Easter.
ASIC’s Moneysmart urges Australians to plan ahead and manage their finances carefully this Christmas to avoid the all-too-common post-Christmas spending hangover.
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