Festive spending fallout: Why millions of Australians are starting 2025 in debt

Nearly two million Australians are facing the new year with a Christmas debt that will take months to pay off, according to a new report by consumer website Finder.

The information service released a survey that found eight per cent of 1100 respondents (or the equivalent to 1.7 million Australians) on average still owed $1,634 from holiday spending, which worked out to a nationwide total of $2.7 billion in debt.

Of those in debt, almost half, or 43 per cent, will take up to five months to pay off what they owe, while 19 percent will need between six to 11 months and 15 per cent will need 12 months or more to pay off their debt.

However, only 23 per cent said they could pay off their debt in less than a month.

Personal finance expert at Finder, Sarah Megginson, said overspending will haunt Australians long after Christmas has wrapped up.

“Millions of Australians have hit 2025 already burdened with debt,” Megginson said.

“During December, many Australians racked up substantial credit card bills and buy now, pay later balances, setting themselves up for a significant financial strain in the months to come.”

The research showed, however, that all spending is not created equal. The survey revealed that Generation X were the biggest over-spenders, with 11 per cent going into Christmas debt, compared to just six per cent of Baby Boomers.

One thing we can all take from this is there is no better time than now to think about our budget, especially as the costs of living continue to increase.

As well as creating a bucket list of things you’d like to achieve or experience you should also check your finances and see if your savings are on track.

But it’s more than just looking over your bank account and super balance. In fact, there are five goals you should be making this new year to help you achieve the stable retirement of your dreams and limit the stresses as you farewell full-time employment.

Balance spending

There is nothing wrong with treating yourself every now and then, whether it’s a trip away with your partner or presents for the grandkids. But you must make sure your spending isn’t going to eat away at your retirement savings.

Try to match your cash outflows with your cash inflows and don’t overextend.

Make a budget

Comfort and confidence in your finances comes from having made a budget and sticking to it. This gives you to freedom and peace-of-mind to get on with the most important part of retirement – enjoying yourself.

But just like a disciplined approach to any strategy of commitment, a reward for achieving the plan, and forgiveness for when we occasionally lapse, should be part and parcel of it.

Aim for durability

If your retirement finances are stable, they are durable. Financially, this means that if you’ve done your sums, either by yourself or with the help of a financial adviser, you can be confident that if you stick to the plan and only spend the amount of money you budgeted for, then an amount of capital will remain untouched, which will carry you into the future.

Do a reality-check

In order to make calculations about how much you can afford to spend each year in retirement, you have to make assumptions about financial matters such as investment interest rates, taxation, inflation and the cost of living.

It’s important to do a reality check of these once a year or so, and reconfirm that the numbers hold. Over time some of these assumptions will breach, for example when interest rates move up and down.

But as long as the change is not large it should not make much difference to the reliability of your budget estimates.

Have a back-up plan

Most of us fear running out of money in retirement so it’s important to create a back-up plan in case things turn sour. There are two things you can consider in this situation that should help you feel more at ease.

Firstly, the Age Pension is always available as a safety net if the worst-case scenario eventuates. And secondly, if your retirement nest-egg is durable, it should also be lasting.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.