Say it quietly, but Christmas is just around the corner. Yes, I know it was only a few short weeks ago we were all enjoying the summer sunshine, but it’s now time to trade in your flip flops for festive jumpers, mojitos for mulled wine and sun tan for tinsel.
OK, maybe we’re going a bit over the top here. Christmas might be the most wonderful time of the year, but it’s also one of the most expensive. In fact, according to the Bank of England, the average household spends £500 more than usual during December. So, have you thought about how you’ll pay for this years’ festivities?
If you haven’t, there’s still time to make the future of your finances shine as bright as Rudolph’s nose, and to get you started here are some do and don’ts to think about this year.
Don’t rely on the last paycheque
I don’t need to save up to pay for Christmas, I’ll just pay for everything out of my November paycheque. Does this sound like you?
The problem here is your personal costs, like rent and utility bills, don’t stop just because it’s Christmas. Be honest with yourself, how much money do you usually have left from your salary after you’ve paid for all your essentials? Is that enough to pay for Christmas? Probably not.
This is why it’s really important to think ahead and spread the cost of the festive season across several paydays. That way, you won’t have to borrow money and your overdraft won’t be expanding as fast as your waistline in December.
Avoid putting it all on credit cards
Yes, there are a lot of advantages of buying Christmas presents on your credit card, not least you get the added legal protection.
But what you need to avoid is using your credit card to pay for things you simply can’t afford. While this might seem like a good idea at the time, you’re going to regret it once the credit card bill arrives in January.
In fact, the majority of people won’t be able to pay off Christmas credit card debts until April.
And whatever you do, don’t borrow
Like using credit cards you can’t afford to pay off, borrowing money you can’t afford to pay back is just going to create serious problems down the road.
Plan your spending
You might think planning your Christmas spending in October is a bit like Santa’s elves only starting work on Christmas Eve. But that’s just not true.
By spreading out the cost of Christmas over just a few months, you can really reduce the strain it puts on your bank account.
The first step is to make a list of who’s been naughty and who’s been nice, so you know who you need to buy presents for.
Are you giving people gifts just because you feel obliged to? Martin Lewis thinks we might be exchanging presents we can’t afford out of politeness. Do you think you could make a pact with your friends and family to stop unnecessary gift exchanges?
Don’t forget about all those extra costs. If you’re hosting Christmas lunch this year, how much is the festive feast going to cost? Good Housekeeping estimate the cost of just your Christmas dinner to be around £25-£40, never mind all the mince pies, tins of treats and boxing day beige buffets you’ll consume across the season.
Do you need to replace the fairy lights that refused to work last year? Have the moths been at your favourite Christmas jumper? How are you going to pay for the train tickets for your annual trip to see some distant relative?
Start thinking about Christmas next year
Yes, you might want to get this December out of the way first, but it’s never too early to start planning for next year.
Think about it this way. If you need to save £500 between now and Christmas Day, you would need to put away about £250 a month.
If you started saving from January, you would only need to put aside £40 a month to save the same amount in time for the following Christmas. How much easier is that?