How do you budget for your family’s Christmas? Are you a wise old Elf who knows exactly how much they’ll spend and squirrels away Christmas saving money throughout the year? Or are you an impulsive imp who flies by the seat of their pants and throws it all on a credit card?
If you’re anything like us, you probably fall somewhere in between the two extremes.
Christmas is all about creating magical memories with the people you love, but for many of us the pressure to spend to excess can leave our credit cards groaning under the weight of Christmas debt come January.
When funds are low it is so tempting to borrow money to pay for Christmas, but when you’re still paying off your little ones’ gifts come spring, summer or even autumn, the Christmas spirit really does feel like a distant memory.
This year, why not make like a wise old Elf and start saving for next Christmas now? Download and print our super, free Christmas Budget Planner.
Make a plan to save for Christmas
The first step to successfully saving for Christmas is to plan out how much you are willing and able to spend.
- Think about all the people you buy gifts for and write down how much you will spend on each one. Total them up to find what your gift budget is.
- Think about what you will spend on food and drink. Will you be doing Christmas dinner at your house? Will you be hosting any Christmas parties? How many will you be catering for? You can probably get a good idea of how much this will mount up to if you look back at your outgoings from the previous few years.
- Think about how many social occasions you and the family are likely to be attending in the run up to Christmas and New Year. Do you usually have a night out with the girls? A works do? Will you be buying new clothes for Christmas parties? Add all these expenses up to find your social budget.
Once you’ve got your full budget breakdown you can tot it all up. This is your total saving goal. Divide this number by the number of weeks left until Christmas to see how much you’ll have to save each week to achieve a debt-free Christmas.
Now you can use our Christmas Saving Budget Planner to count down the weeks to Christmas, keeping track of your savings goals and achievements.
Where will you put your Christmas savings?
Where you put your weekly savings is entirely up to you.
If you’d like to see a big pile of cold hard cash growing in front of your eyes, putting the money in a big jar or glass vase can be a nice visual incentive to keep saving.
However, bear in mind the downsides of saving in this way:
- It’s the least secure way to store cash (obviously you need to make sure you hide your jar away somewhere only you and those you trust are going to be able to see it).
- It can be very tempting to dip into if you need cash in a hurry
- You need to remember to have the cash on hand to put in every week.
You might think about using a Christmas savings scheme but be aware that these are not regulated in the way that banks and building societies are and they aren’t covered by the Financial Services Compensation Scheme.
If the Christmas club you’re saving with goes bust, you could lose all the money you’ve put into it. You won’t gain any interest on your savings and you’re also quite likely to receive your money back in vouchers, which can limit the range of retailers you can spend with.
The safest way to save is to set up a separate easy-access savings account with your bank. The interest rates on these kinds of accounts is never huge, but
- They have the advantage of being incredibly easy to set up (most banks allow existing customers to set up an account online in a matter of minutes)
- and you can set up a standing order from your current account so you don’t need to think about physically transferring the funds yourself.
- Above all, you know your money is safe, as UK-regulated banks are all covered by the FSCS, which guarantees up to £85,000 of savings per person per financial institution. Which should just about cover the cost of Christmas, right?!
The Money Advice Service has lots of free and impartial advice on all things financial, including budgeting and savings. Visit Money Helper from the Money Advice Service.
Right, that’s quite enough of us being sensible and wise. Normal mischief and fun to resume immediately! Happy saving!