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Last Friday as I was walking home, I was a bit puzzled to see huge crowds in the city. After being in Australia for over a decade, for the first time, I am seeing consumers going on overdrive for Black Friday sales. I never knew this was a craze in Australia, I always thought it was a local American tradition, but as with most American traditions (Halloween) it appears to have made its way here. 

That night I was having dinner with a friend who runs an online business – he was telling me how business is always good heading into Christmas and with the arrival of Afterpay as well as the Instagram life, this will boost sales further. 

However, as I look around and see more stores embracing Afterpay, I can’t help but note how much an average consumer is willing to spend and take on debt to have the best picture on Instagram and to appear trendy, fashionable and wealthy. 

A quick check on reveals that Aussies are expected to spend $25 billion on Christmas this year – that’s $1,325 per person. What’s even more alarming is that we know many are still paying off their purchases from last Christmas and now will pile on more debt on their credit cards or Afterpay. Another article on Sydney Morning Herald shows we owe $900 million as of the end of June to the buy now pay later sector. 

This is the sad reality – many who use these services already have bad spending habits. The Australian Securities and Investment Commission (ASIC) said around 44% of buy now, pay later customers had an income of less than $40,000 a year. This is a severe risk issue, and the emergence of such technology will only fuel the debt situation. 

Why is this more prevalent today?

A lot of it is due to consumer behaviour and the emergence of the ‘Insta-life’. When I sit and reflect, many new clients that meet with me and many of my friends have the idea that what they see online is what is ideal for them – the lavish resort living on a Greek Island, the business class trips on short-haul flights, the fantastic shopping and the fine dining experiences. 

Unfortunately, many of those who promote this do not share how the spending is being financed. Don’t be surprised if it is all mostly on credit cards, personal loans and Afterpay. As an adviser, it is alarming that we are seeing an increasing number of people coming to us for assistance with their debt situation in terms of giving them tools to help them manage their cash flow using resources available through websites like Money Smart. 

In most cases, it is about changing their mindset. While we can offer practical strategies to help you manage your debt and to try and speed up repayments, if you don’t change your mindset, it’s not going to work. 

What should you do this festive season?

  1.   Budget – probably the most crucial phrase when it comes to your finances. Always remember to have a budget and hold yourself accountable to it. It is essential that you categorise your spending and know exactly what you are spending on. Then decide what is necessary and what isn’t – ask yourself if a purchase is worth the extra emotional stress from the additional debt. One of the key things my parents have taught me is that – if you can’t afford to pay for it with your savings, don’t buy it. 
  2.   Shop around – another crucial and simple tip – always shop around. You will be surprised by the deals you can find and savings made. There are many deals around – from clothing to accessories to electronics, it never hurts to shop around. Ask yourself, do you need the one expensive piece of clothing from a famed designer shop or can you settle for two pieces of clothing from a lesser known store for the same value? 
  3.   Beware of the credit card and buy now, pay later offers – I have seen many falling into the 0% interest for 12 months offer. These offers are reasonable if you know you will pay it off within 12 months. If you think you can’t, don’t do it. Avoid the credit card at all costs unless you know you are going to make the repayments in full during the interest-free period and you will get extra points for that to use for your next flight booking. 

Always remember what the famous Warren Buffet said “If you buy things you do not need, soon you will have to sell things you need” and you do not want to be in that situation. 

Spend wisely and have a good festive season — Merry Christmas.

Karam Singh, Authorised Representative of Madison Financial Group Pty Ltd ABN 36 002 459 001 AFSL no. 246679.

He can be reached at or 1300 193 136.

This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. We strongly suggest that you seek professional financial advice before action. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc. as at the date of issue.