Whether you are in a bubble of three households or spending Christmas in isolation, the festive season will be very different in 2020.
Yet one thing remains the same: for many, this time of year is a financial struggle.
New figures, from a survey by money app Yolt, suggest that many of us are concerned about how we will afford to pay for presents and other seasonal expenditure: three in ten adults are feeling anxious about their Christmas spending, with a third feeling unable to spend as much as usual on Christmas this year, due to the pandemic.
Pauline van Brakel, chief product officer at Yolt, says that the survey findings remind us all that getting our financial equilibrium right is harder than ever.
‘Finding the right balance between spending at a time like Christmas and putting money aside is tricky at the best of times – let alone when dealing with the current, uncertain economic situation,’ she explains.
‘At what can feel like the most expensive time of year – and with one in seven people saying they are likely to get into debt financing Christmas this year – it is important for people to be mindful of their spending habits to avoid running into debt after Christmas.’
As we prepare to leave lockdown two behind with the opening of non-essential stores across much of the country, we asked some of the UK’s leading money experts for their tips on how to keep spending in check this year, while still having the best Christmas possible.
Put a pot of money aside
Ellie Austin-Williams, financial coach and founder at This Girl Talks Money, says a clear plan of action is the key to keeping spending in check.
‘Set aside your Christmas shopping budget in its own pot, either in cash or using a digital pot. Treat the pot as a completely separate account and you’ll find it easier to manage the money and resist the temptation to let the amount you spend creep up,’ she advises.
Make a plan
Ellie also suggests that making a list in advance will help prevent you getting distracted.
She says: ‘Plan presents in advance. Before you start browsing online or in store, be clear about who you need to buy presents for, what you want to buy and how much you plan to spend.
‘If you have a clear plan of action, there is a far higher chance of keeping your spending in line and not getting distracted by shiny objects.’
Don’t let limited time push you over the limit
Online sales that only last for a few days can pressure us into spending more than we want, says Hayley Millhouse, MD of low-cost financial advice platform, OpenMoney.
She says: ‘Limited-time discounts increase our urgency to buy, but think about what the consequences of the purchase might be. Ask yourself, “Will I still want this next month?” If you want to buy something specific, start shopping around now and make decisions in advance. Set a budget you’re willing to spend and stick to it.
‘Some retailers will make it look like they have huge discounts on products but they might still be cheaper elsewhere. Despite the temptations discounts often bring, try to only buy the things you need.’
Let cashback pay for Christmas
Faith Archer, who runs money blog Much More With Less, uses cashback sites, loyalty cards and credit card bonuses to slash costs.
‘I love using cashback to cut the cost of Christmas, taking advantage of free money earned on spending I’d do anyway,’ she explains.
‘I rack up cashback during the year by clicking through websites such as TopCashBack or Quidco before shopping online, using a NatWest Reward current account to earn cashback on household bills, and paying with an American Express Platinum Cashback credit card.
‘I then boost the total by swapping my cashback for vouchers at specific shops or supermarkets, to use for festive food, wine, presents, cards and wrapping paper.’
If you need credit, get the right type
Sarah Coles, personal finance expert at investment platform Hargreaves Lansdown, says that, if you are going to need to use a credit card for Christmas spending, you should make sure you have the right type.
‘In an ideal world, nobody would borrow for Christmas. But in the real world, Christmas is so expensive that millions of people will dip into the red. Our research shows that one in four people use a credit card for at least some of their Christmas spending,’ she says.
‘If you have a good credit rating, you should be able to find one with zero per cent on purchases. Then all you need is a robust plan to pay it off before interest is charged.’
Financial product experts Defaqto rates Santander’s All in One Credit Card, offering 26 months interest-free purchases, but this does come with a fee of £3 a month.
‘If you end up using a card, there are two common mistakes to steer clear of. The first is just to stick it on an existing card, with interest rates of around 22 per cent or more. We found that one in ten people aged 35 to 54 carry these debts for six months or longer, so the interest will mount up,’ Sarah adds.
‘The second is to fall into the habit of just repaying the minimum each month. This can make us feel like we can manage our debts, but all we’re doing is carrying them for years – or even decades.
‘If you pay just the minimum for three years you’ll also fall foul of the ‘persistent debt’ rules, which means that if you can’t afford to pay more than the minimum, your card can be suspended.’
Limit the gifting
Sally Giblin, who runs preloved clothing company Purebundle, says that as well as buying second-hand where possible, she limits gifting to save money.
‘We now only buy for the children in the family,’ she says. ‘It’s better for the planet and the children have something to look forward to.’
Other ways to limit gifts include choosing to buy only a ‘Secret Santa’ present for one person or to set a price limit on the gifts you buy.
Shop local to save
Business consultant Estelle Keeber saves money by limiting her shopping to local stores. ‘I’ve found I’ve chosen much more affordable, personal presents than my usual run-of-the-mill go-tos,’ she explains.
‘So not only am I saving myself money with my budget buys but I am also supporting local business owners.’
American Express often offers a ‘Shop Small’ promotion in the run up to Christmas, where customers who use their cards in small stores can get £5 credit.
However, at time of printing, the card company could not confirm whether this would run this year.
Only shop when you’re rested
Mario Weick, a behavioural psychologist at Durham University, says that we are more likely to overspend when other things are going on.
‘Impulsive behaviour can be triggered by things such as tiredness, alcohol or information overload,’ he says. According to John Lewis this is a common situation, with one in 15 purchases on their site being made between the hours of midnight and 6am.
Mario also suggests that going for a walk when you’re tempted to make a large purchase could stop you making a decision you regret.
’It may sound simplistic, but one way to alleviate the pressure is to reduce one’s exposure and avoid the situation, if possible,’ he says.
He points to a recent experiment by Atom Bank, which hooked shoppers up to a heartrate monitor and found that they got the same physical ‘high’ taking a brisk walk as they did from hitting the checkout button.
Get help if needed
If it all goes wrong and you do end up with Christmas debt, don’t suffer in silence. Sue Anderson, at debt charity StepChange, says that if you can’t solve things yourself, Stepchange and other charities can help ‘walk through an entire budget process and identify potentially suitable solutions to help address your debt’.
She adds: ‘Whether or not you’re facing debt problems, tools that help you budget and keep track of your finances are very useful. In fact, making a budget is the first step to resolving debt problems – but sometimes it isn’t enough in itself.’
Stepchange can be contacted on 0800 138 1111 and the Citizens Advice Bureau on 0800 144 8848.
If you want more tips and tricks on saving money, as well as chat about cash and alerts on deals and discounts, join our Facebook Group, Money Pot.
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