With only days left until Christmas, www.moneybasics.co.uk, the website that provides simple, clear, independent information about money, offers some hints to help you squeeze the most out of your money and resources. But, warns www.moneybasics.co.uk, make sure you set aside money for essential expenses like food and bills.
- Make a list of everything you will need and how much it will cost.
- Don't forget to allow for hidden costs, such as going out for Christmas meals or drinks with friends.
- Set a budget and stick to it. To keep track of what you spend, take out only the cash that you can afford to spend. That way you'll know when you're at your spending limit because there won't be any money left in your wallet.
- Check your finances and if you don't have enough to cover the costs, either make decisions about how to cut your spending, or work out the cheapest way of borrowing the money.
If you have to borrow to cover your Christmas costs, make sure you only borrow as much as you can afford to pay back. A good way to do this is to work out how much you can afford to pay back each month, times it by two or three and then set it as your borrowing limit. That way you'll know that you'll be able to pay back everything you spend before Easter!
Before you decide how to borrow, consider the following options.
Option one: credit cards
- Credit cards - if carefully chosen and well-managed - can be one way to spread the pain of Christmas, because they will allow some leeway into the New Year.
- Make sure you look around for the best APR and check the small print. The last thing you want is to be charged way over the odds for the privilege of borrowing a few quid.
- Look out for interest-free periods and compare interest rates.
- Having looked around, decide which the cheapest credit option is, and even more importantly, how you can pay it back.
- Remember all credit has to be paid back – seek advice if you have problems managing your payments.
- If you have used credit cards, pay off the balance in the two or three months after Christmas. If you restrict repayments to the minimum, you will find the costs of Christmas have escalated.
Option two: bank overdraft
- Many bank accounts these days have a free borrowing buffer of up to 200 pounds, but check before you borrow. Sometimes you need to request accessing this money before you use it.
- An authorised overdraft will give you access to more money without having to use a credit card. You will still be charged interest on this, but rates are usually fairly reasonable.
- Whatever you do, don't fund Christmas out of an unauthorised overdraft - the bank charges are crippling.
Speaking on behalf of www.moneybasics.co.uk, Keith Tondeur, comments: "Don't be tempted to use priority money aside for mortgage, rent, gas, electricity etc. to fund Christmas, because you will regret it when the bills start coming in."
"What's more, if you have children, don't fall prey to emotional blackmail! If your children like to sit in front of the box, encourage them to watch videos instead of TV in the run-up to Christmas to avoid the inevitable advertising campaigns."
Post Christmas, if you do find yourself in difficulties, don't just ignore things, seek help at the earliest opportunity . To help pay back any money that you've borrowed as quickly as possible, look at www.moneybasics.co.uk for advice on budgeting and saving. If you're struggling at all, the Consumer Credit Counselling Service helplines are open 8am- 8pm on 0800 138 1111.