How do some people manage to have a debt-free Christmas? Is that even a thing? After all, it’s the time when traditionally your credit card gets a battering and any money-saving intentions go out of the window in a flurry of festive spirit.
Last year British consumers put £11bn on plastic to pay for Christmas. Half of us fear that we’ll still be paying off this year’s Christmas when we put up the tree in 2018!
Up until a couple of years ago, that was my tale of festive financial woe as well. A stocking of presents for my daughter, gifts for all the family, Christmas parties, a trip to Santa, not to mention the turkey and all the trimmings. It all costs a bomb. A bomb I’d never budgeted for and would wack on my credit card. “It’s Christmas!” I’d think.
But when the festive spirit is nothing but a distant memory all that over-spending comes back to haunt us! In the form of crippling credit card payments and never being able to save because we have to pay our debts first.
However a couple of years ago I discovered the secret to a debt-free Christmas. It’s really quite simple, and as an intelligent, fairly financially astute person, it’s rather embarrassing I’d never done it before.
Put aside money for Christmas every month!
To be honest, when I was younger I was very much a ‘live for the moment’ type person. I rarely thought about what I was going to spend next week let alone in a year’s time, so the idea of saving for Christmas was laughable.
How times change. I’m not a fan of over-indulging kids at Christmas but as a single mum it’s down to me to buy my daughter’s gifts, get a tree, take her to see Santa and all the rest of it. My mum helps out and treats my daughter to festive outings and indulgences grandparents do best, but the rest of it’s up to me.
So, with money on the tight-side, I decided to set myself a budget and save for it throughout the year. It’s no coincidence that this new ultra-financially responsible version of me came into being when I started using YNAB.
YNAB is my budgeting tool of choice and one of its main tenets is to ’embrace your true expenses’. When most of us write down our monthly budget we list our mortgage or rent, utilities, phone and internet connection. But we don’t think about the larger, but less frequent, expenses like annual insurance payments, summer activities for the kids, birthdays and yes, Christmas!
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The fact the budgeting gurus at YNAB need to teach this fairly basic financial message means I can’t be the only one who’s spent most of their life spending all their income every month and then acting like it’s a big surprise when Christmas comes along!
‘Embrace your true expenses’ means including these potential debt-builders in your monthly budget so that you never have to dread the arrival of a big bill.
So put away the plastic, go debt-free this Christmas:
- In January add up what you’ve spent this Christmas. The consider whether you’ll spend a similar amount next year.
- If you need to cut back figure out how you can save money – see my tips below.
- Take your final amount and divide it by 12.
- The figure you’re left with is the amount you need to save every month. Put it into a separate savings account. Or use a tool like YNAB so you know exactly what you’ve allocated to your Yuletide budget.
- For example, if you decide your budget for Christmas 2018 is £350 – my budget last year – then you need to start setting aside £29 a month from January. Not too painful right?
This year my budget is £500. Because I’ve been saving it every month when I started my Christmas shopping (still a huge amount to do!) it was there waiting to be spent. Yay! In fact, I’m not sure I’ll spend that much this year. I’ll be able to shift what’s left into the pot of money I’m saving for our summer holiday.
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Seriously, this is the secret to a debt-free Christmas. That and STICKING to your budget. If your budget is tight or you’re paying off debt it can be difficult to put aside extra money. But do your best, even if you only save £10 a month, as it will stop you getting into more debt next year.
Money-saving tips for your debt-free Christmas budget!
- Agree on a spending limit of £5 or £10 for presents with your family, even the kids. Here’s a list of cheap gift ideas.
- Do you really need to buy EVERYONE a present? Make a No Unnecessary Presents Pact, or do a Secret Santa.
- Get your creative hat on and make homemade presents. One year I’d made body moisturising bars out of cocoa butter and shea butter.
- Shop around on eBay. Your little darling wants a new bike? No need to get a brand new one, see what you can find on eBay or Gumtree.
- Shop online. This year I set up and Amazon wish list for my daughter’s presents, so much easier to keep an eye on what you’re spending.
- Finally, check out these 50 Christmas MoneySaving Tips from MoneySavingExpert.com.
Do you have any top tips for sticking to a debt-free Christmas budget? Share them in the comments?