Surprise costs have delivered a painful holiday sting to households, but budgeting specialists have warned consumers against burying their heads in the sand.
New research by MyBudget has found that one quarter of consumers faced unexpected expenses over the festive season, with repairs of cars and other items the most common cost at 26 per cent.
Other financial shocks came from unexpected social events and meals (21 per cent), gifts (16 per cent), medical and veterinary bills (14 per cent) and transport and accommodation (12 per cent).
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MyBudget director Tammy Barton said many people forgot that everyday expenses still occurred over the holiday period.
“We see people using up their savings to enjoy the festive season, but forgetting to keep reserves for those unpredictable costs that can occur any time of the year,” she said.
“When times are tight, burying your head in the sand is never a good strategy,” she said.
Ms Barton’s top tips to pay off the unexpected debt included:
• Stay positive.
• Create a budget.
• Set small goals to start.
• Open a separate account for savings.
• Establish positive daily money habits.
The research also found that almost a quarter of consumers had lost track of how much they spent during the holidays.
“Many Australians slip up because they don’t have a plan for their money. It’s amazing how much more people save when they have a plan,” Ms Barton said.
A recent report by SocietyOne found that a majority of people covered unexpected costs by borrowing money from family and friends or adding the debt to their home loan.
“Over a quarter of Australians would fund unexpected costs with extra credit card debt,” the report says.
“One in five of those who had an unexpected expense spent $5000 or more to cover the cost.”