As Summer is in full swing and half of the year is gone, it comes as no surprise that some people are already thinking about their Christmas presents, plans and budgets.
Although it may seem early, it鈥檚 often believed that the earlier you begin to budget and save for big events, the less stress it is down the line. Whether it鈥檚 presents for the family, a winter getaway or even hosting Christmas dinner, this year, it can be an expensive period.
Personal finance expert at NerdWallet UK Amy Knight says that 鈥榠n an ideal world, we would start budgeting for Christmas on Boxing Day.鈥 Acknowledging that most people won鈥檛 do this, Knight reassures as we are only halfway through the year now, there is still a good amount of time to reset finances, look at budgets and start thinking of Christmas spending with these tips.
Have a conversation鈥淣ow is a great time for you and your family to look at budget and see what you aspire Christmas to look like this year,鈥 Knight explains. 鈥淎 lot of people will be spending time with their loved ones at some point over the summer and sometimes it does come up in conversation about who鈥檚 turn is it to host and what exactly Christmas will look like.
鈥淵ou might actually find that there are other members of the family who鈥檝e been secretly wanting to change things up and maybe spend a bit less so if you broach it now, you could be the person that initiates this conversation about dialling things down a little and put less pressure on.鈥
Figure out your Christmas budget
鈥淵ou need to know roughly how much you鈥檙e spending, how many people you鈥檙e buying for and how much per person you want to spend,鈥 Knight says.
鈥淭hen you need to think about other Christmas costs like your festive food shop, any parties you鈥檙e likely to be invited to. Then get the total and think about how you can spread that over the months that you鈥檝e got until Christmas.
Knight used research from NerdWallet and found that, on average, people in the UK aim to save 拢469 for Christmas. With about 25 weeks left until the holiday, that breaks down to saving approximately 拢19 per week.
鈥淥nce you have worked this amount out, then you have to review your current budget and set up an automatic payment as soon after payday as possible to go straight into a Christmas savings account,鈥 Knight advises.
Use notice accounts鈥淚f you are somebody that already has an emergency savings pot, then you can look at higher interest rate options,鈥 Knight says.
鈥淲e have enough time before Christmas that you can use notice accounts which pay a high rate of interest.鈥 A notice account is a type of savings account where the bank or building society requires advance notice before you withdraw any of your money.
鈥淔or example, let鈥檚 say you have got 拢400 to save, there鈥檚 a provider called Emma with a 45-day notice pot and a 4.18% interest,鈥 Knight says.
鈥淚f you鈥檝e got 拢1,000 to save, then one of the best rates currently is StreamBank with a 90 day notice account 鈥 this is where you can鈥檛 take the money out of there for three months but you will benefit from a 4.45% interest rate.
鈥淚f you haven鈥檛 got 拢1,000 right now, Moneybox has got a 95-day notice account that you can start from just 拢1 and that will pay 4.34%. All of those interest rates are well above inflation and are going to help you build up savings faster.鈥
Find easy ways to save鈥淔or ideas of getting the cash you want to save together there are many ways,鈥 Knight says. 鈥淔or example, if you sold one unused or unwanted item from your wardrobe per week on Vinted for 拢20 from now to Christmas, you would have 拢500.
鈥淲ith this, you would have to withdraw it and put it into your Christmas pot to make interest however. You also have to resist the temptation of spending it on the app, but it鈥檚 a way to get the money without having to make any other changes to your budgeting or lifestyle.
鈥淎nother tip is cut back on buying coffees. If you were buying a coffee for 拢3.50, three days a week for 25 weeks and decided to stop and save it, you would save 拢262.50 towards your Christmas pot,鈥 she explains.
鈥淭rading down for example is if you currently shop in Waitrose and you trade down to make all of your food shops from now until Christmas at Aldi or Lidl 鈥 then the savings on what you have been spending on average on your food shop can be dedicated to Christmas,鈥 Knight says.
Future-proof your finances
鈥淪ome people may find themselves in a vicious cycle where they just can鈥檛 seem to break out of putting everything for Christmas on to their credit card and leaving it to January to worry about,鈥 Knight says. 鈥淗owever I would firstly ask yourself to think long and hard about is the joy of the things you鈥檝e bought worth the financial pain? Is the joy worth the pain that you鈥檙e going to put yourself through if you do that again and if you repeat that cycle?
鈥淚f you want to break out of it, then you need to make a plan for how you鈥檙e going to pay off any borrowing that you do this Christmas. If you know you won鈥檛 have additional income coming in, then the only alternative is to make some cut back elsewhere.鈥