It’s coming up to that time of year again and we all know what that means...
Sure, there’s some great stuff we all love about the festive season: fun get-togethers, time with our loved ones, some nice presents (hopefully!) and a chance to reflect. But it’s not without its challenges – and costs. Whether it’s buying presents for the people we love or having to host dinner for all our family, it can end up being incredibly expensive.
Moreover, many of us will get paid earlier in December, but that means waiting up to six weeks before our next payday in January. Add to that the higher costs we already pay in the winter for electricity, and you can see why we can end up feeling extra-squeezed – and stressed – at this time of year.
The good news? There's plenty of ways that you can prepare yourself. The key is to identify those pinch-points, create a financial plan and stick to it as much as you can. Here are some clear and helpful steps you can take to build up that financial cushion and be ready for whatever the festive season brings.
Start saving – for next year!
It’s never too late to start saving up for this year. Equally, the sooner you can start saving for NEXT year, the better. It sounds strange at first, but think about it: it’s better to build up small amounts over a longer period then save (or borrow) a lot more in a matter of weeks. So start that holiday fund today and continue it as a New Year’s resolution.
Save what you can as soon as you get paid. It might help to set up a direct debit if you can figure out how much you can afford to put away. It’ll get a lot easier and hopefully by this time next year, it will be one of those healthy habits, like going for a daily run, that you can feel proud of.
Make your savings easy access
Yes, saving is important – but so is getting your money when you need it! It’s tempting to lock away your money to get a better interest rate. But it’s better to keep your savings in an easy access account in case you experience an unexpected financial shock or shortfall.
Some digital bank accounts offer pots where you can save money with a few taps or clicks. Others allow you to round up your purchases and put the difference in a savings pot – very handy!
If you need to borrow, do it the right way
Borrowing, if done right, can help you bridge the gap and ease the pressure. Helpful forms of credit include 0 per cent interest credit cards – just make sure you understand how long the fee-free period lasts, come up with a repayment plan and stick to it.
Alternatively, your employer might be able to give you access to fair and affordable loans offered by the likes of Neyber.
Keep a holiday budget
It can be difficult to keep track of our spending over the festive season. And there are certain points where money can start to feel really tight. Keeping a budget really helps, as it gives you an idea of what you can afford to spend over the whole period. That’s particularly crucial if you have a longer wait between paydays, or your pay becomes more erratic during this time. Have a look at last winter’s statements to get a rough idea of all the costs. Add up your basic expenses on things like utilities, council tax and rent/mortgage payments. Make sure you’re paying as little as possible by switching your essential bills online - it doesn’t take long and it can save you hundreds of pounds.
Make some decisions
- Think about your discretionary spending. What can you do to reduce these costs? Are you taking on too much? Is there anything you can do to make your life easier?
- Plan your food shop early, make lists for what you need.
- Book any travel as soon as possible to reduce costs.
- Set yourself some helpful limits and take cash or a prepaid card when you go out so you don’t end up overspending by accident (or because you feel under pressure).
- Make sure other earners in your household are contributing their fair share to the Christmas budget.
- Finally, give yourself a break. Christmas adverts, perfect social media images, the constant lure of online shopping…keeping up with it all takes its toll. So schedule time for “self-care” and regular breaks from your phone. And give yourself permission to say “no thanks” if you need to – that way, you’ll have enough energy (and money!) to appreciate the things that really matter.