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With fewer than 50 days to go until Christmas, many of us are already planning a lavish celebration to make up for last year’s restricted festivities.
But Christmas spending leaves many of us with fragile finances — a new survey from Yorkshire Building Society shows that 29% of us are planning to go into debt to fund this year’s Christmas expenditure.
‘Covering the cost of Christmas, for many, can be quite daunting and stressful,’ says Tina Hughes, director of savings at Yorkshire Building Society.
She adds that last year, the average Brit spent almost £500 on gifts, decorations and food.
This year, that figure is set to rise further, with a study from broadband company Plusnet suggesting we will spend £520.
‘Many of us are looking forward to a much better Christmas with our loved ones than last year,’ says Nick Silverman, head of business at Plusnet.
How we will be spending Christmas
A recent survey from Plusnet suggests we are willing to splash more cash at Christmas this year.
Here’s where the money will be going.
- 38% will spend more money going out for meals and drinks
- 37% will spend more on presents
- 31% will spend more on family activities
- 29% will have extra people over for Christmas dinner
- 18% will spend more on decorating their homes
‘But a larger Christmas celebration will likely come with a bigger price tag and it’s a good idea to plan for that cost now.’
While it might seem that there is plenty of time until Christmas, if you want to save money and keep within budget it makes sense to start as soon as possible.
Here are some things you can do straight away.
Apply for a rewards credit card for Christmas spending
Most of us spend more at Christmas, and the good news is that if you put that spending onto a credit card you can be rewarded for it.
If your credit rating is good, you could get as much as 5% cashback on some purchases.
The fee-free Platinum American Express card offers 5% cashback for the first three months, so this is an ideal choice of card to apply for.
Not everyone takes American Express, however, so you might want to consider alternatives, depending on where you usually spend.
The Amazon Platinum credit card offers a £40 Amazon voucher when you get the card and also converts both Amazon and non-Amazon purchases to points, while Sainsbury’s credit card offers a similar deal for regular shoppers in its stores.
Buying Christmas presents on a credit card also gives you some protection if a supplier goes bust or goods do not arrive.
With products worth more than £100 bought on a credit card, the card firm is ‘jointly and severally liable’ for the goods being delivered and fit for purpose, so if you can’t get a refund from a retailer, you can get one from the card provider.
As always with a credit card, though, ensure that you pay off your bill at the end of every month, otherwise the interest you pay on the bill will dwarf the rewards you receive.
Make a list before Black Friday
Many stores offer big discounts for Black Friday, which this year falls on November 26. It may be worth waiting until then to see whether presents that you want to buy are discounted.
Figures from comparison site MoneySuperMarket suggest that we are most likely to spend on technology, with the average Brit expecting to shell out £254 in the Black Friday sales for tech.
‘If you want to avoid breaking the bank this Christmas, think ahead about the types of gifts you’re preparing to buy and then see if you can find them in the Black Friday sales. With reductions of up to 60% on tech, clothing, home and lifestyle products, the savings could be big,’ says Jo Thornhill, money expert at MoneySuperMarket.
Making a list in advance, with prices, can help you to check whether you are getting a real Black Friday bargain, since sometimes prices are artificially inflated before being ‘slashed’ again by some retailers. One useful tool is Camel Camel Camel which gives you the price history of specific items on Amazon, so that you can see whether they have gone up in price.
Consider a supermarket savings scheme
Worried about the cost of your Christmas dinner? Christmas savings schemes can give you a discount at Asda or Iceland.
Asda will pay you a maximum bonus of £15 if you save £280 on its savings card, and you must pay this by November 21, while Iceland pays you a £1 bonus when you load £20 onto its savings card, which you can operate through an app.
Make a budget now
‘The anxiety of splurging on gifts and other Christmas bits can be enough to turn you into a right old Scrooge, but planning in advance can put your mind at rest when treating your friends and family to that perfect present,’ says Nick Drewe, money-saving expert at discount platform WeThrift.
‘Most people do not know how much they are going to spend over the festive period, and suddenly what starts off as picking up a lovely £20 gift becomes a stress-inducing purchase.
‘Everyone’s budgets are different and everyone is equally as capable of overspending if they’re not too careful. Make a plan for your entire festive budget, from food to alcohol, and decorations to presents.
‘Try to set some money aside for it as early as possible.’
There are several tools to help you make a Christmas budget. Apps such as Money Dashboard can help you manage your day-to-day finances by helping you see bank accounts and credit card spending at a glance, while Christmas-specific apps such as Christmas Gift List Tracker or Manage Christmas allow you to make lists and set budgets, to ensure you only shop for everybody once.
Agree to keep costs down
‘Agreeing on a maximum spend with your loved ones will help to eliminate stress for everyone. You could even agree to participate in Secret Santa, where everyone receives a gift, but you only have to buy for one person within the group,’ says Nigel Borwell, founder of financial advisers site Local Financial Advice.
Round up spare change
‘Check if your online banking app has the ability to do spare change round-up — it could help you save hundreds of pounds ready for Christmas when funds are tight,’ says Mary Elizabeth, founder of personal finance website MeMoreMoney. She uses the feature on her Starling Bank account, which rounds every transaction up to the nearest pound and puts the extra in a special saving space.
‘I have managed to put aside an extra £446 this year with spare change round-up,’ she says.
If your bank does not offer this option, apps like Plum or Moneybox can connect to your bank account and do the same.
‘If income tax went up by 5-10% next month, you would be very annoyed, but you pay it before you even see it. Why not set up an automatic bank transfer of 5-10% of your salary for the next few months to an account specifically focused on buying or covering the costs of your Christmas pressies,’ suggests James Hawkes, founder of personal finance website Freed.
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