Recent research revealed UK shoppers are expected to buy fewer and cheaper items this Christmas, especially online, due to the ongoing impact of the cost of living.
A further study from Creditfix also found that:
- One in four people expect to fund this Christmas using credit cards.
- 20% of credit card users expect it will take them at least three months to pay off their debt from this Christmas.
- Three quarters of people don’t start saving for their Christmas shopping until October, November or December.
Getting into debt or using your savings to fund the Christmas period at the last minute can feel anything but merry for your finances. The good news is, by thinking about starting to save for Christmas earlier, you could reduce a lot of unnecessary financial stress.
Here are my top five tips which could change how you save for Christmas (and even other things too) – including how a FREE My Review with Skipton could get you thinking about your longer-term finances for the better.
1. Have an idea of how much you need to save
The first step is knowing how much you’re able to save each month and how much you want to save. Having a target to save towards makes it much easier to split up into goals and stops costs from spiralling out of control.
Research shows that a typical family spends on average £740 more in December than in other months. If that sounds like you, saving £70 a month from January could help you to reach that target by November next year.
2. Think about where you save your money
Consider the kind of account you’re going to be putting money into. Will your money be working as hard as it could be for you?
June 2023 data from CACI found there are over 7 million UK adults with at least £10,000 sat in current accounts paying zero interest. That adds up to a hefty £225 billion.
Maybe it’s time to question if this includes you.
Putting cash in a savings account doesn’t mean locking it away without access.
The average easy-access interest rate has gone over 3% AER for the first time in almost 15 years. This is unlikely to last forever though, and rates might start coming down soon. You may as well take advantage while you can.
There are many easy access savings accounts and ISAs that give you instant access to your money. We have a range of easy access accounts on offer – with the highest currently offering over 5% AER variable (as at November 10 2023).
3. Set up a standing order
With interest rates at their current levels, one way to look at it is the sooner you start saving, the more interest you could be earning.
If you get into a good routine of putting money away each month, it will become a habit. You should get to the point where it actually feels stranger not to save.
And with online banking so readily accessible, it can be something you don’t even need to think about. You can set up a standing order each month to transfer into your savings account. If you’re already a regular saver, you could set up a separate savings account just for Christmas and redirect some of your money into this account.
Bonus tip!
Beware of buy now pay later schemes
Buy now pay later schemes have grown in popularity over recent years. The UK spends almost one billion pounds a month through retailers using these schemes.
Unlike traditional borrowing, buy now pay later schemes are often interest free. Payments are usually due by the next month or can be spread out over several months.
While schemes like this could feel like a quick win at Christmas, it’s easy to end up borrowing too much and become unable to keep up with payments. And even though it’s advertised as interest free, if you miss payments you could still be charged late fees.
4. Start your Christmas shopping early
The idea of starting your Christmas shopping during the summer season may seem crazy. However, prices of things fluctuate across the year. If you were to see something on offer in April, you could buy it cheaper then and put it away.
More often than not there are pre-Christmas bargains to be had. This also means you’re less likely to have to panic buy last minute, which will prevent you buying too much or paying too much. Once again, it’s all down to planning.
5. Check if your money could be working harder with a FREE My Review appointment
Finally, whilst I’ve got you thinking about your Christmas spends, why not give your money in general a good once over?
You’re more than likely focusing on getting in the Christmas spirit right now. But January could be perfect timing to take an overall look at your finances to see if you could get your money working harder.
Book a My Review
If you can spare one hour to talk about your financial future and check if your savings are on track, a FREE My Review appointment could be just right for you.
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