It’s easy to overindulge at Christmas and after an unprecedented year, the desire to splash out over the festive period might be stronger than ever.
Although the lifting of restrictions across the UK will help families to reunite, Christmas might look very different. After a year of business closures, emergency grants, and furloughed workers, remember that the same financial pitfalls remain.
Here are six dos and don’ts of Christmas spending that will allow you to enjoy your festive period, without paying for it into next year.
Dos of festive spending:
1. Do set a budget (and stick to it)
It can be tempting to plan the perfect Christmas lunch, ask everyone what present they would like, and only then work out if you can afford it. But be sure to budget from the outset. Decide how much you can afford to spend on food and presents and build your plans around that budget. This will help ensure you stick to it.
Using cash can make it easier to track your spending, but that could be tricky this year with much of your Christmas shopping likely done online. One-click purchases are dangerous all year round so keep a running total of your expenditure (referring back to your budget at all times) and you won’t be left short.
2. Do plan ahead and write a list
Once you have your budget, you’ll want to write a list of all your outgoings including Christmas lunch and everyone you are buying presents for.
Work out a rough spend per person and then decide what you intend to get them. Do some research to ensure your plans are realistic and find an approximate price for each item too.
Initially, this will help you to budget. But it will also keep you on track when you come to buy your presents, whether online or on the high street. Stick to your list, avoid temptation and you should remain within budget.
3. Do work out price limits for an extended family Secret Santa (or give to charity)
If you have a large extended family and a growing list of people to buy for, maybe this is the year to try something different. You might work out a spending limit per person and try Secret Santa. That way each member of the group only has one present to buy.
Equally, you might pick a spending limit and buy a Charity Gift on that person’s behalf. It’s been a difficult year for many charities, struggling with increased demand for services along with fewer donations.
Agreeing on a spending limit that works for all parties or opting for charitable donations can help to remove the pressure of obliged giving and help worthwhile causes at the same time.
Another great way to save money on extended family is to opt for homemade presents. Crafted items or food gifts – baked goods, allotment hampers, or jams and chutneys – all make great, and thoughtful, gifts for a reasonable cost.
Don’ts of festive spending:
1. Don’t be unrealistic
Working out a budget and then writing a list based on an overall amount is a must. Withdrawing a set amount of cash to use for purchases is usually a good way to track spending and ensure you stay within budget, but online shopping makes that impossible.
If you are shopping online, consider making some of your online purchases via credit card and you’ll be protected through Section 75 of the Consumer Credit Act. This Act comes into force if your purchase costs between £100 and £30,000 and either doesn’t turn up or is misrepresented by the company selling it.
Be sure to track your spending, look out for 0% deals, and only make purchases that you can afford to pay off quickly.
Being unrealistic about what you can afford might mean finding yourself in debt or paying exorbitant charges for dipping into an unauthorised overdraft. You don’t want to spend 2021 paying off a Christmas debt. Be sure to set a realistic budget and stick to your shopping list, avoiding impulse purchases that are not budgeted for.
2. Don’t forget to shop around (and ask for a gift receipt)
Whether you’re shopping on the high street or online, you’ll want to know how much you can expect to pay for your goods.
Use price comparison sites such as Google Shopping or Pricerunner to find the best deal online and if you’re on the high street make the most of the human interaction to barter. A high street retailer might be able to match, or even beat, an internet price but you won’t know until you ask.
Always keep your receipts or better still, ask for a gift receipt. Legally, only the buyer has the rights to a refund or exchange but a gift receipt should help your chosen recipient should they want to return an item.
3. Don’t leave making travel plans until the last minute
Christmas expenditure isn’t just about presents. Many of us will be travelling to see family and friends this Christmas and the lifting of coronavirus restrictions between the 23rd and 27th of December could see ticket prices rise.
Trainline suggests that booking tickets through them up to a week in advance of travel could save you 61% compared to a standard Anytime fare bought on the day of travel. You might also be able to save money by buying a ‘split ticket’ or planning an off-peak trip.
Between 9 am and 2 pm on weekdays, and after 7 pm on weekday evenings and at weekends are the cheapest. Choose those times if they fit into a travel plan that works for you.
Get in touch
The chance to get together as a family is more important than ever this Christmas but that doesn’t mean you need to overspend. Work out a budget, stay within it, and if you need advice about how your expenditure fits into your long-term financial plans speak to us.
Please get in touch if you have any questions about your financial plans for this Christmas or the new year.