Max Phelps: How is anyone able to afford Christmas this year? We can’t, and we’ll put most of it on credit

There’s nothing better than seeing the look on the face of someone you care about when you hand them a thoughtful gift. You simply can’t put a price on it … or can you? The Australian Retailers Association has given it a good crack, predicting Aussies will spend $11.8 billion on gifts this festive season, which is about $1090 for every household. Where on earth is this money coming from? On average, Australian households are only saving 60¢ for every $100 they earn. For the whole year, that works out to be an average of $720 for each household to cover Christmas, holidays, paying down debts and building up savings. That means the $1090 household average is an impossibility without going into debt. Families simply don’t have savings to splurge this year. And if we rely on credit cards, we’re starting the new year off on the wrong financial foot. Not only will about 30 per cent of those using credit cards carry a balance forward that will cost them interest, but the other 70 per cent will be starting 2025 in the red. Psychologically, while spending money on presents for people makes us happy, going into debt will likely lead to stress later. Simple strategies to avoid falling into the credit card trap. If we stop for a moment this festive season and look at what really makes us happy, it tends to be experiences, especially time with loved ones and time off from chores, rather than things. The exceptions are gifts for others and treats that we don’t do the rest of the year. Top tips to create a happy Christmas on a budget The more we try to enjoy ourselves, make others feel special and have fun together, the more ways we find to be happy and the less we need to rely on spending money. The best things in life really are free. So this Christmas let’s not use credit cards as a crutch and in January, we’ll feel all the better for it. Max Phelps is a money coach, mortgage broker and author