Christmas comes but once a year – which is probably just as well, considering the financial hangover can often last all year round. According to credit reference agency Clearscore, the average person found themselves £3,600 in the red after last Christmas.
With just under one week left until Christmas, (and winter energy bills rising and Brexit anxieties multiplying) we are running out of time to get finances sorted for the festive period.
At Continuum, we know the importance of financial planning – and preparing for the Christmas season can be the perfect opportunity to introduce some of the key principles.
Deal with debt, and go easy on the credit
Most of us will be using cards to pay this year. It’s dangerous to carry around a lot of cash. It makes you a target for theft and is too easy to simply lose.
But cash does have one big advantage. It makes budgeting easy, because you can only spend what you have – unlike a credit card. With a credit card, debt is easy to get in to. A single shopping expedition can be enough. Once in, debt is very difficult to get out of. Unless you pay your credit card balance off in full each month, you pay substantial interest on the balance.
Clearly, although using credit over the festive period is common, you need to deal with it as soon as possible.
The simplest way to do this is to look around for a card offering 0% for balance transfers. At the end of your Christmas shopping, transfer the cost of all your purchases, from presents to the turkey – plus all your other existing credit card debts – to your new card.
Then see how long your 0% interest period will last. Six months is common, and 12 months is not unknown. If possible, aim to pay off your entire balance before the 0% offer runs out. If it is not possible, pay off as much as you can, and at the end of the period, transfer it to another 0% offer.
The one thing to remember is never to use the card for purchases, no matter how big the emergency. Doing so will mean interest will start to be charged to your card.
Of course, you will want to spend before Christmas. Presents, food and drink will all cost money. However, with Brexit worries and the mounting pressures of internet shopping the High Streets of Britain are suffering from a chronic shortage of customers.
This is bad news for shopkeepers, but potentially good news for you. By shopping around it may be possible to take advantage of sales and offers which will make your money go a great deal further.
Saving a few pounds on the latest tablet, game or the Christmas dinner can actually be part of the holiday fun. Setting a budget and sticking to it is a challenge – but it could be good practice for the rest of the year.
It might be a little late for this year, but by planning ahead, you may be able to build up a reserve of cash which will let you take care of the Christmas costs for next year. Once you are out of debt and have a little extra each month, you can start to save. Having a cash reserve is important for a rainy day, or as a nest egg for the future as well as a source of funds for a special break.
At Continuum, we can help you find the best way to potentially grow your money – perhaps in an ISA, to ensure the taxman can’t get his hands on it – or with an investment that puts your money to work for you.
In fact, at Continuum we are ready to help you find the best way to use your money all year round. We can look at your circumstances and your priorities and find the best ways to reach your financial goals.
We know that everyone’s needs are different and getting professional help to understand your financial objectives and the best ways to reach them is essential.
So, give yourself a Christmas extra. Simply call us at Continuum.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate personal finance
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