27 November 2019

During the festive period, it can be very easy to get caught up in the mood of the occasion and overspend without thinking about the long-term consequences on your finances. But short-term enjoyment can sometimes mean long-term financial pain.

With that in mind, here are our top-tips that you can use to plan your Christmas shopping more effectively and turn your Christmas into a financial success!

1. Set a Budget

The first thing you should do is draw-up a budget for your Christmas spending; including not just presents, but any additional spending you’re planning on for food, drink and festive socialising. Try not to allow yourself to be pressurised – especially by your relatives and friends into spending more than you can really afford this Christmas - and make sure to stick to the budget you draw up. See our all-year-round budgeting guide here for some more detailed information about how to make a personal budget and stick to it.

2. Pay Off Credit Cards

If you use a credit card, you should try to ensure that you pay off the existing balance in full before the next bill arrives in the New Year where any of your Christmas spending will then be included. Credit cards are generally quite an expensive way to borrow money; and department store cards are even worse, since they generally have higher interest rates than average high-street bank issued cards.

If paying off your current balance before the New Year bill arrives isn’t an option, an alternative to explore is the possibility of trying to transfer your current credit card balance to a 0% balance transfer card.

For a small fee (typically 3% or 4% of your current outstanding card balance) you may be able to transfer your whole outstanding card balance to a new card provider who will not charge you any interest on that outstanding balance for anything between 6 & 18-months.

3. Check your Overdraft Details

If your Christmas spending threatens to take you into your bank account overdraft, you need to make sure it’s an authorised overdraft, and that you know the interest rate and any other charges your bank applies to the facility. You should always try to avoid unauthorised overdrafts, as they are likely to attract high charges. If in doubt, always check with your bank first.

4. Christmas Clubs & Loyalty Cards

You can also finance your spending by cashing in the balance you may hold in a “Christmas Club” account – this being an account built up during the year to spread the burden of the Christmas spend. Maybe you also have credits on your store loyalty cards. These don’t earn you any interest, so if possible, you should cash them in to help finance your Christmas spending. You can read more on Christmas clubs and how they work here.

5. Be Wise with Savings

Make sure you know how your extra planned spending over Christmas is going to be financed. Perhaps it means withdrawing funds from a savings account, and if that’s the case and you happen to have savings in more than one account, make sure you access the money from the account which is paying you the least rate of interest.

6. Look for Deals

This will sound like an obvious tip, but if you shop around there can often be some excellent deals and offers around the festive period for you to take advantage of. With fashion retailers, media stores and supermarkets all battling amongst each other to get customers through the door, there will be a whole host of opportunities to get discounted products and deals for your Christmas spending. But don’t spend unnecessarily just because it’s cheaper! Not spending at all saves more money than any sale ever could!

7. Look for Vouchers & Coupons

This tip follows the same logic as the previous one; there will be lots of opportunities for discount coupons and store vouchers for your Christmas shopping out there, provided you make the effort to seek them out. Discount voucher and promo code websites are a great resource for these types of deals. Plus, vouchers and coupons can also make for a good Christmas gift themselves, given the amount of Boxing Day, post-Christmas sales that are held in a wide variety of shops.

8. Monitor your Spending

Keep a close check on your spending – maybe by compiling the running total on your mobile phone or tablet. The bills will come in after Christmas as surely as night follows day, but you’ll be better placed to manage them, if you know what you spend over the festive period.

As ever, keep your receipts in case presents need to be exchanged or refunded – and for those items you send to your friends, put in a gift receipt to enable them to return the goods as well, if needed.

Of course, these were just a few examples of the different ways that you can effectively plan, budget and succeed in making your Christmas a financial success. For more articles on how you can effectively manage your finances, you can visit the Buffa blog here. And if you’re finding that you’re struggling with your finances, you can visit our Debt Advice Hub here, or see how a Buffa loan can help here.