December can be an extremely expensive month for most Irish families between dinners and drinks, Christmas party dresses and kris kindle presents, it all adds up! We sat down with The Money Doctor to get some great budgeting tips for Christmas!
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Bernard Manning the comedian once quipped I bought my kids a set of batteries for Christmas with a note on it saying “toys not included” …While we still need our sense of humour, these are challenging economic times and especially at Christmas time, where every cent counts. Planning is everything.
Christmas spending is usually never budgeted for and so the credit card or short term loan invariably comes to the rescue. Please be sensible this Christmas and plan what you are going to spend and importantly, where the money is coming from to fund that spend. So here a few tips to help you both through and after this great season of goodwill and good cheer :
Here’s what to do
1. Make a list and after setting a spending limit, work out the cost of:
- Presents (covering family, friends and bursaries – binmen, postmen, your work colleagues etc)
- Additional Christmas costs (cards, decorations, tree/s, holly and wreaths)
- Food and drink for the festive period (you usually overstock so check the food and drinks shopping tips below)
- Entertainment (Fun fairs, cinema, pantomime, zoo etc You know you are not going to sit in front of the television for the entire 12 day season and any excursions outside the home usually means spending money…so budget for this)
2. Total all these costs - you are going to have to pay for them through either your own savings, an overdraft, loan or a credit card. The ideal, of course, is to fund from your savings and in particular where you have actually earmarked the current year’s savings for this precise purpose – the Christmas spend. If you have to borrow, try and ensure these borrowings whether a loan or credit card debt are repaid before next Christmas.
3. Savings - the best course to take for your Christmas costs is to start saving the previous January – Regular Saver, a Goose Club or Stamp Saving Scheme – and put what you can afford away each month on a regular basis for 11 months – standing order or direct debit. This should be part of your monthly budget plan. Therefore the total amount of your Christmas bill should be divided by 11 to ascertain what that monthly saving amount should be.
If you have not saved, you will need to borrow for the coming Christmas - but you then should plan to save DOUBLE from next January so as to pay for both this Christmas and the next.
I would also suggest you encourage your children to save – they should be saving a third of their pocket money every week, that’s if they receive pocket money. Check out Regular Saver accounts – minimum €100 per month, maximum €1000 for 12 months attracting up to 3% interest rate – are best for adults. EBS and KBC Bank have the top rates. Children will not, in the normal course of events, be able to save this minimum amount for their regular saver accounts but they can open bank, building society, An Post or credit union deposit accounts even for as little as one euro. They need to save as much as their parents need to save and have the saving ethos ingrained into them.
4. Borrowing - interest rates from your local credit union or your own bank tend to be among the cheapest options when it comes to short-term finance ( e.g. € 2000 loan over 3 years at 12% will cost € 66.43 per month … but better to pay over 12 months – this would cost € 177.70 per month at the same rate – as Christmas comes around every 12 months ) Avoid moneylenders (authorised and unauthorised alike) at all costs. Overdraft interest rates range from c.11% PLUS you can pay up to an additional 12% surcharge if you exceed your overdraft limit without permission. If you have to use an overdraft, ensure you do not exceed the limit therefore and if you must, always call your bank branch and look for that permission for the increase. Credit card rates vary from c. 9.11% to 24%+ ( the latter for certain store cards ) and virtually ALL the credit card companies charge well over 20% when you withdraw cash on a credit card from the date of withdrawal. You might consider transferring your balance to another credit card company IF they allow you and offer low rates for the first 6 months or so in January and if your credit record is good and you have a plan to reduce or pay off entirely within a certain time frame. You might be even able to save additionally during this period for next Christmas.
5. The Christmas aftermath - even the piper has to be paid and putting your head in the sand when the bills finally come through the door in January is not going to solve your problems if you have been a little heavy on the spending sauce. If you are in a hole, the first thing you have to do is stop digging. Communication is key and if you simply cannot afford the required repayments, negotiate and pay what you can afford. You will need a plan of when the debt will be regularised.
Theoretically, you shouldn’t spend what you don’t have BUT we are all human and sometimes sense goes out the window. Perhaps that should be cents.
Obtain professional help if you have to but do not ignore. Finally, don’t forget, Christmas comes around every year, so plan to save in January for next Christmas !
Assuming your funding is sorted, here are some additional tips on the Christmas spending:
If you have a large family, consider Kris Kringle – it can be fun too as you may not know or want to know who gave you your present. It is also cheaper as you can set limits on the present to be bought.
1. Food and drink at Christmas time
- Have a pre-written shopping list – even Santa has one ( ? he’s making a list, and checking it twice ? ) and never shop on an empty stomach !
- Don’t buy on the double – you may already have the item in your cupboard so always check what you have in stock before making your list
- Look for discounts and special in-store offers
- Use vouchers and coupons – it is no shame to bring them into shops and supermarkets and save money. Saving money is good practice.
- Consider supermarket own brand generic products rather than the more expensive brand name products especially for household utilities.
- Buy in bulk – you may be able to avail of economies (buy 1 get 1 free) with bulk buying – it’s cheaper - you can always keep a few boxes of chocolate or bottles of wine for those last minute callers whom you have forgotten to buy a present
2. Presents do not always have to be of the pecuniary kind.. you could give one hour of your time to a favourite aunt or uncle to clean their car, cut their grass or simply visit. You could also offer your time to charitable works and causes – do a mini-marathon for charity and get fit at the same time !
3. Christmas presents can also be bought all year round – once you have identified the person you should carefully choose the present and prepared to buy some off-season – it can save you money and time.
4.Gift tokens are always acceptable – a €1 money voucher to open a deposit account might be the very incentive for a loved one to start them saving. Another might be a book token for the Money Doctor 2016 to help them better manage their money
Above all, have a Happy Christmas and a peaceful, healthy and prosperous New Year.
John Lowe the Money Doctor, Personal Insolvency Practitioner & Fellow of the Institute of Bankers, is managing director of Providence Finance Services Ltd trading as Money Doctor and based in Stillorgan Co Dublin. He is author of The Money Doctor 2016 ( from Gill & Macmillan) tel +353 1 278 5555, email firstname.lastname@example.org for seminars or consultations. Web www.moneydoctor.ie / www.independentfinancialadvice.ie – Twitter (@the moneydoc) Facebook, Linkedin, Pinterest & Google+