After the year we’ve had, Australians may be more tempted to rely on debt to meet their holiday obligations. But there are other ways to get through the festive season without breaking the bank...

At the best of times, Christmas can put a pretty severe strain on our hip pockets. And let’s face it, this isn’t the best of times.

You don’t have to have lived through Melbourne’s extreme lockdown to have been affected. Border closures, travel restrictions, school shutdowns, big event cancellations, mandatory face coverings…measures that would’ve seemed unthinkable 12 months ago have become commonplace around the country.

The economic fallout from the government response to COVID-19 has hit many Australians hard. While some of us have been lucky enough to retain our livelihoods, others have seen their incomes put on hold for the foreseeable future. The AMP Financial Wellness 2020 Report indicates 42% of working Australians have seen a negative impact on their personal finances1.

So how are we making it through? While government programs like JobKeeper and Early Release of Super have helped tide some of us over, there are signs we’re changing our behaviour to suit the times, particularly if our working hours have been affected.

Some of us are getting more financially stressed…

Among those whose work hours have been negatively impacted, one in five report severe or moderate levels of financial stress, double the levels recorded by employees who have not been directly impacted. The figures are even greater for those who perceive the events have had a tangible negative impact on their finances, with 23% suffering from severe or moderate stress - almost three times the percentage reported by those who say they were not impacted2.

…we’re starting to rely on credit more…

COVID-19 has changed our relationship with money, particularly for those of us who whose working hours have been affected – 11% are increasingly relying on credit and 7% have had to take out a personal loan3.

…and we’re becoming more prudent

The pandemic appears to have acted as a positive trigger towards living for tomorrow rather than today. The number of employees who are saving specific sums for a rainy day and establishing a financial plan jumped by 5% and 6% respectively4.

Christmas comes but once a year

So with Christmas just around the corner, it’s tempting to splurge and use our credit cards as a circuit breaker from all the doom and gloom.

While the festive season may be a less gregarious occasion for many of us and our social calendars may look a little less busy this year, it will still come with the usual pressure to spend.

5 ways to curb your spending and manage your debt

  1. Look at smarter gift giving. Find ways to keep a lid on spending while still enjoying gift giving that’s kinder to your hip pocket.
  2. Plan ahead where possible. Try starting as early as you can and plan your Christmas budget in advance.
  3. Think debit rather than credit. If you can, consider using a debit account with a competitive interest rate. And if you can’t avoid credit, try to limit the damage. Think carefully about the type of credit you choose to use and check the important conditions, like interest-free periods, and what you’ll be charged if you can’t pay on time.
  4. Consider consolidating your debt. Small debts may not seem significant, but having multiple smaller debts could mean you pay higher interest rates and multiple sets of fees, all of which can hit your hip pocket. Consolidating your debts into one loan can give you a clearer picture of what you owe and hopefully save you money on interest too.
  5. And if all else fails…go with the COVID flow. While it would be nice to think we’ll all be back to ‘normal’ when the festive season rolls around, it’s likely restrictions will remain in force around the country. So the reality is that we could still face significant curbs on our freedom to spend on goods and services this Christmas. Of course, while we may not be able to indulge in a few beers at the MCG between overs there’s nothing to stop us racking up a hefty bill online, particularly if we’re feeling the pinch from an extended lockdown and keen to make up for lost time. So it’s still important to work to a budget and avoid overspending.

1- 4 AMP Financial Wellness 2020 Report, The Behavioural Architects. August 2020

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What you need to know

This information is provided by AWM Services Pty Ltd (ABN 15 139 353 496), is general in nature only and hasn’t taken your circumstances into account. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant product disclosure statement or terms and conditions available from AMP at or by calling 131 267.

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