As the festive season approaches and demands on your finances are stretched to their limits, it’s vital that your Christmas budgeting is razor sharp to avoid the financial stress that the January bills bring.
There is little wisdom in deferring thoughts of how you will pay for Christmas until the postman delivers the bills in January. Each year in January there is a spike in the numbers of people seeking advice for arrears on loans and hire purchase, catalogue and mail order debts, credit card debts and overdrafts – and even information on bankruptcy and individual voluntary arrangements (IVA).
To help you think about Christmas budgeting and how you avoid a festive debt hangover, here are 10 top tips to mind the pounds and pennies.
Christmas budgeting – plan early
Be realistic and budget accordingly. Work out how much you are going to spend on each person – and stick to it. Manage expectations as to what you or Santa can give.
Don’t forget the everyday bills
Remember that rent, the mortgage, utility bills, food bills, council tax and other existing debts still have to be paid – and the consequences can be severe if they’re not. Even though it’s Christmas, get your priorities right.
Don’t bank on an overdraft
If you do need more money, don’t just run up an overdraft without talking to your bank first – it will work out much more expensive.
Keep things simple
If you can afford to pay for your goods outright by cash, cheque, or debit card, don’t be persuaded to take out extended credit agreements unless they really do work out cheaper.
Shop around
Try as many different places as possible to find the best price. Buy what you want and not what other people say you need. Be wary of extended warranties; the cost of a repair could be less than the cost of the warranty and remember you have consumer rights to reject goods that are faulty.
Buy safe to be safe
Whatever the deal, whatever the temptation, don’t buy from traders you don’t trust and don’t borrow from unauthorised lenders. The initial savings and convenience may prove to be a false economy.
Read the small print
Check for hidden extras in any credit agreement. Work out the total amount payable. Ensure that the monthly instalments are within your budget before signing. Interest free credit can seem attractive, but if you don’t pay on time, or miss a payment, you could have to pay a lot more.
Do your own credit checks
If you are going to use a credit card, shop around and compare terms. Some cards charge high interest rates, but provide interest free periods or discounts. Budget for all these costs and put the payment dates in your diary.
Be organised
There’s a lot to remember at Christmas. If you’ve borrowed money don’t forget that it won’t be long before you have to make a payment. Make sure you pay on time, even if it is only the minimum, or you will be faced with additional charges.
Start planning and saving for next Christmas
If 2022 has taught us anything it is that however frugal you are, life has a habit of blindsiding you. Few could have foreseen war returning to Europe and the massive impact it has had on our energy bills and weekly shop. So, once Christmas is over, it’s worth looking at what you did well and what you didn’t. Learn from your mistakes and start planning how you will do things differently next year. This might also be a good time to start saving for next Christmas.
If you found Christmas budgeting – 10 simple tips to avoid stress in January helpful, you’ll find more everyday budgeting tips on our Finance channel.
About the Author / 50connect Editor
