Overspending during the festive season inevitably leads to financial pain in January. Financial journalist and author Laura Whateley shares her saving tips for the festive season.
With the amount of additional expenses we incur over the festive season – from fairy lights and food, to parties and presents – it should come as no surprise that the average household spends an added £500 at Christmas time, according to the Bank of England. In fact, over the next few weeks, Brits are set to spend a whopping £1.6 billion in preparation for Christmas, according to comparison website TotallyMoney.
To keep you from weeping into your wallet, Laura Whateley, financial journalist and author of Money: A User’s Guide, shares how you can take control of your seasonal spending.
1. Be smart with your budget
To avoid shopping until you run out of cash this year, try to sit down and work out how much you want to spend on Christmas and how much you need to set aside to get there.
Try the “paying yourself first” approach to saving. This means taking cash from your pay packet as soon as you get it and setting it aside in a Christmas savings pot. This will prevent you from accidentally spending it. App banks such as Starling allow you to set up separate pots or spaces to transfer money. It’s different to the standard savings account, as it allows you to split and section your money for different priorities – and you can do it all on your phone.
2. Let an app save for you
If you struggle to save, consider doing it in small amounts and often, instead of large amounts every once in a while. The Chip app uses AI to analyse your bank account and work out how much you can afford to ‘chip’ away at it and move cash into savings.
Bank app Monzo has a feature called Coin Jar, which rounds up your spending to the nearest pound and sets aside the difference as savings. So, for example, if you buy a sandwich for £2.60, Monzo will automatically round it up and debit you £3 and set the 40p aside into a savings account. Or, take on the Monzo £1 savings challenge, where £1 is taken out of your account every day. You could of course up the amount – if you saved £5 a day from now until Christmas, you would have more than £200.
3. Consider switching bank accounts
Get a pre-Christmas cash injection by taking advantage of the free cash perks attached to certain current accounts. Switching your bank is far less hassle than you think, using the current account switching service. This moves your payees and direct debits for you and informs key contacts such as your employer or gym of your new bank details so you don’t have to.
4. Don’t fall too hard for the sales
Black Friday is in theory a great chance to buy all your gifts at a huge discount. However, beware retailers who increase their prices before the sales. They do this so that it looks like they have reduced their prices more than they actually have. It’s best to monitor the cost of what you want to buy far in advance to work out whether the sale price is genuinely an exceptional bargain.
If you don’t mind a full inbox, sign up to retailers’ newsletters – subscribers usually get a heads up on sales. A good tip is to add items you want to buy into your online basket then ignore them for a few days or a week. Chances are the shop will then send you a discount code email to encourage you to complete checkout.
Which saving tips will you take this festive season?
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