It has been a scorcher of a summer, with many places in the UK and Europe experiencing record-shattering heat. But summer is finally and mercifully drawing to a close and before you know it Christmas will be here. Yes, Christmas. With the weather still on the warm side you may feel it’s entirely too early to start thinking about that, but it is never too early. And for families who are facing financial difficulties, particularly those that have small children (with all of their childish expectations), it’s especially important to start planning for Christmas now.
Actually some experts advise planning for Christmas at the beginning of the year, immediately after the holiday season. Granted, many people are in a financial squeeze at that time and have no desire to look ahead to yet another spending spree. But if you start planning early and plan smart, you’re much less likely to get yourself mired in holiday debt. And spreading the cost of Christmas across the entire year instead of over a few weeks puts much less of a strain on your finances.
But we’re long past January now. No worries, you still time to plan and save. Start by making a budget, even if the prospect seems distasteful to you. Then make a commitment to stick to it. Your budget should be based upon what you can realistically afford without skimping on necessities in order to fund the holidays – and without going too deeply into debt. Give yourself a little bit of slack but don’t go too far over budget or you will have defeated your purpose.
Explore Your Savings Options
Once you have a budget and savings goal in mind, it’s time to start actually saving. If you have a bank savings account, check with your bank and see if they will let you set up a separate pot for your Christmas goal. Many banks do. Another option is a cash ISA (individual savings account). The interest paid on these accounts isn’t exorbitant but it is tax-free.
You may have heard of Christmas savings clubs, which have undergone a bit of a revival in recent years. The typical Christmas club returns savings in December in the form of vouchers, store credit or gift cards. One disadvantage is that they aren’t regulated in the same way as bank and building society accounts. Moreover if a Christmas club goes out of business you may lose all of the money you put into it.
Credit unions might be an option worth considering; some offer schemes that work like other Christmas clubs. And unlike those other clubs they have the advantage of being protected by the FSCS.
Many supermarkets also have Christmas savings schemes. Some even offer bonuses equivalent to 4-6.5%, which is significantly better than the returns on many standard savings accounts. There are of course restrictions, most notably that the savers are limited to spending the money only with that retailer. Furthermore in most cases a lost, stolen or damaged card is a total loss; it is like losing money from your wallet. Finally the funds are not ringfenced or protected in any way, so even though it’s unlikely that the supermarket in question will not go out of business, they are under no obligation to keep the Christmas money separate.
Be Diligent, Even At Christmas
Sometimes despite your best efforts – no matter how diligently you save and no matter how bargain-conscious you’ve been throughout the year – you will come up short on cash. Unforeseen expenses and other emergencies can leave you with far less money than you’d planned to have for Christmas. In that case it may be appropriate for you to take out a short-term loan. The right kind of loan can make the difference between a bleak Christmas and a happy one.
But it is very important to watch out for the con artists that come along every holiday season and target individuals and families who are facing financial difficulties. There are numerous Christmas money scams that have taken vulnerable people for many thousands of pounds. And even some of the legal lenders take unfair advantage of desperate families at Christmas time. How do you know the crooks from the legitimate players? And of the legitimate lenders, how do you know which one is best for you?
As with anything else having to do with important money matters the key lies in researching your options. If you have to borrow money find the lender who can best serve your needs, and then make a commitment to pay the loan back on a timely basis. Then redouble your efforts to save even more for next Christmas. After all, it will be here before you know it.