Why you should start getting ready now for Christmas

By Presbyterian Support Northern (PSN) Chief Executive Shaun Greaves. PSN’s Family Works financial mentors help people work out their finances and plan for the future.

Even though Christmas 2025 is still 12 months away, this January 2025 might be the most important in many years to start getting ready.

Having struggled through Christmas, the new year is an ideal time to plan a new financial approach.

PSN’s Family Works budgeting experts expect to see more people than usual struggling with Christmas debt at the start of 2025, having swiped the credit card or resorted to buy now pay later services. It can be difficult to resist the endless ads showing happy people receiving expensive gifts and eating expensive food.

Figures show 2024 was a harder year than usual for households. IRD figures continue to show the highest on record withdrawals from KiwiSaver funds for financial hardship reasons.

New credit data from Centrix shows mortgage arrears have increased by 10% compared to October last year. And the number of people behind on their consumer debt payments rose to 461,000 in October, up 3000 compared with the previous month, equating to 12.14% of the active credit population.

A January financial overhaul can achieve two things – tackle the debt from Christmas 2024, while preparing to avoid the same outcome next year.

Our financial mentors’ number one tip for a financial overhaul is to take a deep breath and pause.

Secondly, people should take stock of their bills and debt – what can they afford? Writing down bills and debts, and considering future spending on “needs” is critical before seeing what’s left for “wants”.

Secondly, our financial mentors tell clients to look back – to review their bank transactions for last couple of months.

Next, they should look forward and review future payments across the coming six months, checking that outgoings are within incoming money on a weekly or fortnightly basis.

And finally, they should use “stop, start, continue” to help trim their budget.

For example, they could “stop” using UberEats every weekend, “start” putting aside a certain amount from every payday to build towards a savings goal (such as next Christmas’s spend), and “continue” menu planning every week, to avoid overspending on groceries.

Some favourite budgeting tools include:

• Money Lover (easy to use)
• Mybudgetpal (you don’t need to be a Booster KiwiSaver member to use)
• PocketSmith (automatic bank feeds are available for a fee)
• Spendee (works with main New Zealand banks, PayPal)
• CashNav (only Westpac customers)
• Other online tools include Sorted (an independent govt agency) and My Money Kete (offering online workshops, members only Facebook group, live chat).

Above all, our financial mentors emphasise that it’s critical to avoid Buy Now Pay Later (BNPL) spending.

BNPL is now ubiquitous, described as the “alcopops” of credit and likely the means of getting into debt for the first time. A recent study showed 57% of 260 young Kiwis going into debt the first time used BNPL.

Using BNPL means shoppers are more likely to purchase, increasing from 17% to 26%, and basket sizes are on average 10% larger.

BNPL services drive shoppers to spend more by dividing repayments into smaller installments to give a sense of control, and to give shoppers the perception that costs are trivial.

It can take six months to a year of going without to rebalance the books after an overenthusiastic Christmas spend-up.

Managing finances, however, is not just a matter of repayments after spending has taken place.

It’s far more important to bypass that spending in the first place.

For the coming Christmas, our mentors recommend the all-important list of food and presents, using this to keep an eye out for specials.

And when the time comes, if you can’t afford presents without resorting to BNPL, our financial mentors recommend DIY presents – making fudge, or offering an experience or service such as lawn mowing, laying down a hangi or babysitting.

Even though next Christmas seems so far away, a financial reset in January is a good way to avoid doing the same thing over again and expecting different results.