As we approach the festive season, it's natural to have the best intentions. However, it’s easy to get carried away, and find yourself dealing with a debt ‘hangover’ that can be felt well into the New Year.
The Office of Fair Trading ('OFT') regularly sees people grappling with mounting debts, some even adding this year's Christmas expenses to unresolved debts from the previous year.
To try and reduce the financial stress associated with the holiday season it’s worth taking the time to do a little forward-planning.
12 Christmas Tips for Budgeting:
- Make a budget
Be realistic and budget accordingly. Work out how much you are going to spend on each person and stick to it. Work out what money is needed for extra food and going out. Total it all up and this is your Christmas budget.
- Don’t forget everyday life amidst all the hype
Christmas is a special time of year, but it is important to remember it is just one day. Don’t forget rent, mortgage, utilities and the other bills you have to be pay regularly. These are priorities and the consequences can be harsh if they’re not paid.
- Affordability, not desirability
Remember that most people appreciate the gesture and thought that goes into a gift rather than how much it cost. Many people agree to buy each other inexpensive, ‘jokey’ or consumable gifts, or have a ‘presents for the kids only’ agreement. These techniques can be useful to keep Christmas manageable and can also be a relief for other people, if it makes their shopping list shorter!
- Say what you want
Present giving (often) works two ways, so can be a great way of getting things you actually need. Writing a present list isn’t just for kids and it is worth having a good think about it beforehand.
- Flog it to help with Christmas cash
Before you decorate your home for Christmas, have a clear out. Are there unused, unwanted clothes or other items lying about that you don’t need? There are several local social media pages, websites and webpages which can be used to sell items online.
- Small sacrifices can boost your budget and your health
Think about what extra savings you can make. Consider walking to work if it’s possible or simply reduce the number of takeaway coffees during the day and take something from home for lunch. Small savings every day will add up and improve your budget (and maybe also your waistline) before Christmas!
- Shop around
Try as many different places as possible to find the best price when buying for others or yourself, but be very wary of buying ‘too good to be true’ deals from uncontrolled sellers online.
- Be careful with credit
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 to make sure you pay on time (even if it’s only the minimum), or you will be faced with additional charges. Avoid an overdraft - it could be a costly way of borrowing money, if it’s not agreed with the bank.
- Don’t throw away receipts
Keep the receipts for goods you have purchased. You will need these if it turns out that there are any problems with your purchases. Also, many stores have post-Christmas sales and without a receipt you could find that you will only be reimbursed the sale price rather than the full price paid before Christmas.
- Returning unwanted gifts
Unfortunately, you have no contract with the retailer - the person who bought you the gift does. This means that you cannot insist that the shop accepts goods back merely because they are unwanted. Shops are under no legal obligation to receive the goods but may have a policy about returning unwanted items, which fortunately many do - some retailers will offer credit notes or an exchange, if the goods are returned in perfect condition and if proof of purchase can be provided.
- Start planning and saving for next Christmas
Once Christmas is over, it’s a good time to start saving for the next one. Work out how much you have spent and divide it by ten. Start saving this amount in February. Then you should have enough saved up by November. Open a savings account to help you to keep your savings separate from your regular income. This gives you less temptation to spend and can earn you interest at the same time.
- Don’t panic
If you find yourself in a situation where money and debt is a worry, tackling problems early is always the best way to resolve them. The OFT's Debt Counsellors offer confidential advice and support on the Debt Freephone line 0808 1624 080 or online.
John Wannenburgh MHK, Chair of the OFT, said:
‘Do not be embarrassed if you are experiencing financial difficulties. Pick up the phone and contact the OFT’s confidential debt counselling service. Our debt counsellors will lend a sympathetic ear and help you to help yourself get back on the right track in terms of managing your debt.’