As your vacation comes to a close, it may be worth assessing the current state of your finances. Expenses could often rack up over the holiday season, be it through travelling, Christmas presents, or social gatherings with friends and family. According to a Finder survey of 1,039 Australians, 15% noted that it may take between 1 and 5 months to pay off their holiday spend, with 5% needing 6 to 11 months.
However, with proper planning and discipline, you may just speed up your financial recovery and establish a more sustainable budget for the months to come. We explore five steps to effectively managing your finances after the holiday break.
Assess your spending history
Before planning out your post-holiday budget goals, it could help to gain a clear understanding of where you currently stand financially. Consider creating a detailed list of all your holiday-related expenses, using tools such as spreadsheets or financial management apps to categorise items such as gifts, travel, decorations, and entertainment. All this can serve as a comprehensive overview of your spending activity during the holidays and allow you to identify areas where you may have overspent or encountered unexpected costs.
It could then help to consider the reasons behind any instances of overspending. Could they have been impulse purchases or due to unforeseen circumstances? External pressures are also often to blame, with 1 in 5 Australians going into debt due to “keeping up” with the activities of their social circle. Whatever the case may be, reflecting on these aspects could help you learn from the experience and make informed decisions moving forward.
Crafting a post-holiday budget
Once you’ve mapped out your financial situation, you could then consider planning out your post-holiday budget. Take into account both your immediate needs and long-term wants, considering factors such as your current income, debts, and fixed expenses. Having a detailed overview of this could offer a clear picture of your financial goals moving forward, along with your available resources and areas where adjustments may be needed.
Prioritisation may help with this, keeping your essential expenses covered while minimising non-essential ones. For example, you could ensure crucial bills such as rent or mortgage, utilities, and groceries take precedence while temporarily cutting back on luxury expenses such as the latest clothing items or social events. Instead, it may be worth using these funds to repay debt or redirecting them to a savings account to accrue interest. Our savings accounts, for instance, offer unique benefits and features which may help you reach your financial goals faster.
Breaking down your larger financial goals into smaller, more achievable milestones could help ensure steady progress.
Strategies for overcoming post-holiday debt
Tackling any outstanding debts could be a crucial step towards regaining financial stability. For example, you may want to close your credit card accounts or reduce your limit to help avoid overspending once you’ve cleared your debt.
Additionally, consider options such as taking out a personal loan to consolidate your debts. This involves combining your various debts into a single, more manageable payment. Not only does it help streamline the repayment process, but it could also help you take advantage of reduced interest rates. For example, we offer personal loans at low variable rates with the option of paying back on a structured weekly, fortnightly, or monthly plan.
Reviewing your financial goals for the upcoming year
Breaking down your larger financial goals into smaller, more achievable milestones could help ensure steady progress. Consider strategies such as planning for your next holiday-related expenses well in advance, which may include taking advantage of sales early in the year.
This may not only help spread out spending over months instead of weeks but could also help you avoid extra costs such as relying on last-minute, express shipping fees. If you’re looking to save a specific amount by the end of the year, you could choose to put away money in small monthly increments, gradually increasing these by the year’s quarter.
You might also want to consider opening up a Term Deposit where you could potentially boost your savings after a certain fixed period.
However, be sure to stay flexible. Having room to adjust your goals as needed could help address any unexpected events that may pop up, such as changes to your income or new lifestyle goals. This way, you could better adapt to evolving circumstances without feeling discouraged or derailed from your financial objectives.
Whether it’s saving for a home, education, or retirement, commitment is key to staying disciplined in your overall budget.
Building a financial safety net
Finally, having an emergency fund could play a critical role in maintaining long-term financial health. Like any other bill, consider it as a non-negotiable expense and prioritise regular contributions. It could serve as a crucial financial buffer for unexpected expenses, ensuring you’re better equipped to handle crises without disrupting your overall financial plan.
While it may be tempting to dip into these funds to pay off your holiday debt, doing so could leave you vulnerable in the long run – saddling you with remaining debt as well as zero savings for emergency situations. Instead, consider exploring opportunities where you could earn additional income, such as a part-time job, freelance work, or a passion project. These not only diversify your revenue streams, but could also serve as financial cushions for debt repayments and help rebuild your post-holiday budget.
Set the stage for your post-holiday financial recovery
As you establish new financial habits for the rest of the year, it’s important to focus on your big-picture financial goals as well as your immediate priorities. Whether it’s saving for a home, education, or retirement, commitment is key to staying disciplined in your overall budget.
Our savings accounts could help you reach these goals faster, offering competitive interest rates with zero account keeping fees. Earn bonus interest through our Bonus Saver account when you make no withdrawals in any calendar month or gain additional travel rewards through our Qantas Points Saver. Get in touch today to learn more about how we can help meet your unique financial needs.
Finder. 2024. “Dashing through the bills: 7.7 million Australians in Christmas debt”. https://www.finder.com.au/aussies-in-christmas-debt-2024
Finder. 2022. “’Keeping up with the Joneses’: How peer pressure has sent 4.3 million Australians into debt”. https://www.finder.com.au/how-peer-pressure-has-sent-australians-into-debt
The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the advice, consider its appropriateness to your objectives, financial situation and needs. Before opening an account with us, you should read our Terms and Conditions for Savings Accounts and Payment Services and Financial Services Guide.
Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305.
Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 557 AFSL/Australian Credit Licence 238 305. The information in this article is of a general nature and has been prepared without considering your objectives, financial situation or needs. Before acting on the information, consider its appropriateness to your circumstances.
Published February 2024