Financial Planning for the Festive Season

Christmas can be an EXPENSIVE time

  • Make a list and after setting a spending limit, work out the cost of:
  1. Presents (covering everyone)
  2. Additional Christmas costs (cards, decorations, tree/s, holly and wreaths )
  3. Food and drink for the festive period (you usually overstock so check the food and drinks shopping tips below)
  4. Entertainment (Funderland, 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)

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.

Savings – the best course to take for your Christmas costs is to start saving the previous January – Use a Regular Saver 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 Saveraccounts – minimum € 100 per month, maximum € 1000 for 12 months attracting up to 4% interest rate – are best for adults. 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 bankbuilding 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.

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.

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.
  • Food and drink at Christmas time
    • Have a pre-written shopping list
    • Don’t buy on the double 
    • Look for discounts and special in-store offers
    • Use vouchers and coupons
    • Buy in bulk