Saving for Christmas

We have only just got over Christmas 2019 so why are we talking about saving for Christmas? Well, it crops up at the same time every year but so many people seem to be surprised by it and end up getting themselves into a cycle of debt caused by this one celebration. Borrow to fund this Christmas, pay it off during next year then borrow again for the next year!

Why do so many get into Christmas debt when they have a budget?
Not necessarily a lack of budget, but a lack of budgeting skills. Anyone can write out all the things they spend on each month. That is just a list. What use is it if we don’t add in the things that don’t happen every month or manipulate our budget for all the random things that will undoubtedly happen and cost us money during the year? This is exactly what goes wrong for people who get into debt over Christmas.

How can I avoid Christmas (or any other event) debt?
Save! If you spend money every Christmas, your budget should include a line for Christmas. How much do you plan to spend in total? Divide your total by your budget period and that is how much you should be putting away each budget period to cover your Christmas spending.

I don’t have any spare money to save!
You need to ask yourself if you really want to spend on this one-off event. If the answer is ‘yes’ then something else in the budget for the year must go, I’m afraid. First off, consider what you really need in your budget – rent, council tax, gas, electricity, travelling expenses, food shopping, mobile phone and tv licence might be on this list. Afterwards, prioritise all the other things you want that are in there – clothes, make up, nights out, takeaways, holidays and new gadgets could feature. Rank them in order. Whatever is bottom of the list could be given up ensuring you can afford those Christmas gifts.

It’s so important to realise that money really doesn’t grow on trees and sometimes a trade-off is needed to make sure we don’t get into unnecessary debt.