UK Debt: August 2021 statistics
August 27, 2021
What are autosaving apps?
September 13, 2021
Now that the Summer holidays are nearly over, children across the UK are back to school and life takes on a bit more structure and routine, the next big seasonal holiday that is sure to put a dent in your wallet is Christmas. Yes, we’ve mentioned the C word but it’s better to budget for Christmas earlier rather than later.
‘Tis the season of goodwill and gifting, which brings with it warm, fuzzy feelings but also potential shame around money; not being able to afford gifts for everyone; comparison; the lure of credit, and starting the New Year in debt that could have been avoided.
We are here to show you how to budget for Christmas (or indeed any big planned expenditure) and the time is NOW. You will find that the earlier you start spreading the savings, the less stressed and less likely it is that you will turn to credit.
According to the Money Advice Service, the average UK family was planning to spend over £800 on Christmas last year, which was an increase from 2019.
Not everyone has £800 lying around to blow on Christmas, especially after the last 18 months, so budgeting early is the way forward.
Just an FYI before we start – if you have not read our Money Overhaul post then do it now – it will give you lots of tips as a basis for taking control of your finances and you will know where you stand financially to go onto the next stage of budgeting.
Why should you budget for Christmas?
According to research, at least 30% of the UK population get into bad debt due to their expenditure at Christmas.
This can be due to splurging, not planning correctly and not saving early enough. One of the worst feelings is of regret and shame going into the New Year with bad debt hanging above your head. This is why we want to help you with some ideas on how to save now to avoid that pain.
How do I start saving?
Think about how much you will realistically spend at Christmas and then divide that amount by the number of weeks left up until that date. What does the figure state? That is how much you should aim to save each week to reach your savings goal.
You need a figure in black and white of what is left after all your essential bills are paid that can be used as savings. To do this, you need to work out your accurate incoming and outgoings. Ensure that you are looking at your statements, your direct debits and standing orders from all accounts and totalling them up. You may find that you are paying for things that you had forgotten about – a subscription here, or a gym membership there that you no longer use. Cancel them because that’s a saving for the Christmas pot.
If you find that you are unable to reach your goal and you are in fact in a position where you are overspending, then there are steps to take to help you which are detailed in our Money Overhaul blog.
Top tips for general budgeting
- Select your main categories of spending, i.e. socialising, food shop, clothes allowance, mortgage/rent, utility bills, subscriptions, etc
- Ensure that you are not spending more than you earn – you need to balance your income and outgoings
- Set up “bills” accounts with your bank in line with your spending categories – think of them as little pots which you send money to each month in order to cover the bills you have going out. For example – if you’re self employed then have a tax account that you pay into each month; if you’re planning on going on holiday or budgeting for Christmas, have another account set up for this; have a general savings account/rainy day fund; set up a mortgage and bills account, etc
- Set up a standing order to each of these mini accounts each month once you get paid into your main account. This money is then separate from the figure left in your main bank account – this can be known as your disposable income for you to do with what you will
Top Christmas budgeting tips that you can think about now!
- Set up a standing order on payday for an affordable amount – do not leave it to the end of the month to save anything that you have left over – there may be none!
- Use an auto saving app – to find out more about this, read our blog post which is coming soon!
- Work out what your Christmas spends will be – you need to look at budgeting for presents, food and drink, socialising, travel, outfits etc. If this is an extortionate amount then seriously think about order of importance – do you really need to buy your cousin twice removed a present? Can you turn your hand to crafting or baking a gift? Do you really need to cook three types of meat on Christmas Day? Can guests BYOB? Can guests contribute to the festive meal? Think outside the box
- Think small – after the last 18 months family and friends will just want to spend time with you rather than bank on expensive gifts
- Four present rule for kids can help budget and focus – something they want, need, wear, read
- Pressure to overspend is immense – planning helps to stop the panic buying
- Thought about a Secret Santa with the wider family? This would dramatically lower the budget and it brings in an element of fun
How much do you usually budget for Christmas? How will you do it? If you have any top tips then please let us know so that we can share on our socials!
If you are finding the prospect of Christmas difficult to deal with from a financial point of view, then please contact us. We are happy to discuss the options that could be available to you.
