Start saving and stretching your cash now to avoid a New Year financial hangover
24 October 2018| Last updated on 13 November 2018
Christmas may still seem a long way away (unless you’re one of those people who’s already counting down the days!), but it pays to start planning now.
Last year, families spent around £820 (AED 3,908) on Christmas typically in the UK, previous research from VoucherCodes and the Centre of Retail Research suggests. European families average around £532 (AED 2535) at Christmas.
Many households will have put their Christmas on credit – but with some planning ahead, it may be possible to build a pot of cash and make savings here and there which will stop you forking out more than you need to. If you’re visiting loved ones this Christmas for example, booking travel tickets ahead could help to ease the costs.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, says: “Around one in three people end up putting Christmas on credit, which can prove expensive. Given that you have a bit of time until Christmas, you can use the opportunity to put some cash aside, and use a few cunning tricks to boost your Christmas savings, so you can celebrate this year without breaking the bank.”
Here are Coles’ 10 top tips for building up a money pot for Christmas…
1. Save money each month
Set up a standing order to put money into a savings account as soon as you are paid each month, so you’re not tempted to spend your Christmas savings.
2. Consider microsavings
There are a number of approaches you could take. Some banks allow you to round up each spend to the nearest pound and save the rest, while some apps regularly take small sums of cash from your current account and put them into savings for you. The idea is that they’re so small, you don’t miss the money, but large enough to add up.
3. Switch current accounts
Some current accounts offer interest rates of up to 5%, while others will give you a bonus for signing up – to kick-start your Christmas savings. It’s not a good idea to switch for a bonus alone, but if the account itself suits you, it’s a nice extra for Christmas.
4. Have a pre-Christmas clear out
Have a look through the cupboards for old presents and things you haven’t used since last Christmas. If you sell them on auction sites or specialist sales sites, you could raise a handy lump sum.
5. Try trading down brands
If you buy branded goods, try the own-brands. If you buy own-brands, try the basic range. Alternatively, give a discount supermarket a try. You’re unlikely to like everything you try, but you may find everyday savings you can take advantage of for life – and in the interim you can cut your grocery bill by 10% or more and put the savings aside for Christmas.
6. Cut out the small luxuries for a couple of months
This doesn’t have to involve a major sacrifice, but if you were to drop a family takeaway once a week, a daily coffee, and a drink after work on Thursday, you could put aside an extra AED 600 a month, which would boost your Christmas savings nicely.
7. Start with the budget – not the wish list
Once you’ve established your savings strategies, you’ll have an idea of what you can afford to spend: This is where you start – not the big list of things you ideally want to buy.
If you don’t have enough cash to cover the wish list, you can then decide either to cut back on each gift, or chat to people you know well enough and agree not to buy for one another this year. Who knows, they may be just as relieved by the idea as you are.
8. Cashback websites
Sign up to one or two cashback websites, and whenever you shop for anything between now and Christmas, you’ll get some cashback.
9. Cashback credit card
This offers similar benefits, but comes with a major caveat: If there’s any chance you won’t pay this off in full and on time every month, then give it a wide berth – or you’ll quickly spend far more in interest than you’ll ever make in cashback.
10. See people in the New Year
Not only will this give you another pay day to cover the cost of their present, but it gives you the option of re-gifting if your budget is really stretched.