Stocking-stuffer tips for budgeting this Christmas

Christmas is upon us and many will be keen to get a head start on planning for the festive season, whether that’s organising food shops, festive activities, or Christmas shopping for presents.

Stocking-stuffer tips for budgeting this Christmas

Christmas can be an expensive time. With the impact that the pandemic has had on our finances, and inflation at its highest in a decade, many of us may feel that our finances are a little more squeezed than usual.

"Although it’s important to enjoy ourselves, it’s equally just as crucial to continue to live within our means and, if possible, keep up positive savings habits."

Although it’s important to enjoy ourselves, it’s equally just as crucial to continue to live within our means and, if possible, keep up positive savings habits. Emma Watson, head of financial planning and advisory services, shares her five top tips on budgeting for Christmas.

1. Prioritise your spending

Before splurging your finances on all things Christmas related, keep in mind what you need most and what is most important to you. Is buying luxury or high-end food important to you, or would you prefer to have more to buy presents for loved ones, for example? Once you’ve established the items that are at the top of your priority list, this should make sticking to your budget a little easier and help curtail any unnecessary spending. Once your main items are out of the way, you can have a little more freedom on spending elsewhere.

2. Calculate your expenses

Whether you prefer apps or a notebook, noting down how much you plan to spend will help you keep to your budget and not succumb to the urge to splurge. Breaking down your expenditure into smaller chunks is useful as you won’t spend all your budget in one go. It’s also worth working out what essential spending you have each month, such as mortgage repayments or rent, food, or household bills, and to then calculate your remaining disposable income for things like gifts, holiday décor, and family parties.

3. Separate your spending money from your day-to-day bank account

Having a separate bank account from your day-to-day expenditure sets a clear divide between your festive budget and your daily expenses. Setting up direct debits for essential bills to be paid on payday could give peace of mind that anything left can be used for spending on all things merry and bright. Some banks offer a ‘sweep’ function so that any unspent current account funds go into savings each month. Doing this will allow you to plan for your budget and help you to remain more money conscious.

4. Check your bank statements

Much like Santa checks his naughty or nice list twice, be sure to check your bank statements. A good way to keep tabs on your expenses is to keep track of your purchases. With online banking, and many banking apps now categorising spending, it’s even easier to identify non-essential spending and help gauge how much you’ve spent on presents and holiday cheer. A good way to assess how on top of your day-to-day spending you are is to mentally estimate your current account balance before checking. Many of us underestimate how much we spend!

"A good way to assess how on top of your day-to-day spending you are is to mentally estimate your current account balance before checking. Many of us underestimate how much we spend!"

5. Continue to save for the long term

Whether it’s saving to get on the property ladder, a wedding, or for your retirement, it’s important to remember to keep saving for your longer-term goals and make regular contributions towards your savings. While you may have budgeted and have a rough estimate of your future spending, it’s hard to know how much you’ll need in the future.

As tempting as it is to overspend with the knowledge that you can pay back later, make sure you are not placing too much of a burden on your future self. We’re often tempted by buy-now-pay-later schemes when succumbing to our indulgences. However, there is little point in having a lavish Christmas if the result is high interest-bearing debt, which can not only be very stressful to manage but will also reduce your ability to save for the future.

If you would like to find out more about any of the topics discussed above, or to arrange an initial meeting with one of our financial planners to discuss your situation, please get in touch with us.