Avoiding financial difficulties this festive season
When it comes to Christmas, there is a lot to celebrate. The festive season tends to be characterised by overindulgence and buying gifts for loved ones. However, the holiday cheer is often accompanied by huge pressure to have the ‘perfect’ Christmas and we are encouraged to spend, spend and spend.
Although money doesn’t buy happiness there is a connection between financial distress and poor mental health. It’s no surprise that many feel the financial burden of the festive season when problems can arise thus impacting mental health and stress levels as a result. Research from YouGov indicates that one in every three Britons will go into debt to pay for the perfect day.
Salary schedules are usually changed by employers during the festive period.
For the large section of the workforce that is paid monthly, it is common practice for organisations to pay their staff during the third week of December so it falls before the Christmas break. Although being paid early feels great at the time, it can cause cash flow issues later on.
Overspending is common at Christmas and there’s a high probability of going into debt. An early payday means one paycheque has to last up to six weeks. It’s important for both employees and employers to understand this and avoid financial difficulties in the weeks that follow.
To relieve stress over the Christmas period, giving up on presents altogether may be too drastic. However, there are other, more acceptable ways to financially prepare for the festive season.
1. Prepare in advance
Planning ahead can help you feel more in control; this includes the ever-growing Christmas gift list for the people you invited for Christmas dinner.
Buying presents as and when you see them throughout the year can reduce a large outlay in December which leads to debt. Alternatively, try setting up a separate bank account specifically for Christmas so that you set aside money all year to spend in December.
2. Create a budget and stick to it
This is one of the most important things to keep festive spending in check. The first step is to establish where money will be spent during the festive season. For instance, will it be spent on presents, decorations, parties, eating out, or travel? It’s important to include regular monthly bills, such as rent, mortgage, utilities, and food.
Writing everything down helps to keep yourself on track. Although it can be tempting to spend extra on something you know a friend would love, keeping within spending limits will ensure you don’t find yourself in debt.
Sticking to your budget is just as important as setting one. While you may want to overspend during the holiday season, you may come to regret it in the new year.
3. Be wary about borrowing money and use savings wisely
Many find themselves borrowing money or funding additional spending on credit. However, this usually means accumulating debt and high-interest rates.
If you are using a credit card, ensure it can be paid off when the bill comes in the New Year. Cards all have different interest rates but some also have interest-free periods or discounts. Price comparison websites can help as a guide. As for extended credit agreements with retailers, make sure they do work out cheaper prior to committing to them.
4. Shop ahead
Christmas shopping doesn’t need to be done in the month leading up to it. Starting early by collecting gifts means that, when December arrives, you will have a bank of presents ready to go without the financial pressure of having to buy everything at once.
5. Shop smart
When it comes to doing your Christmas shopping, be smart. Going out and buying the first thing won’t always be the best deal. Shop around – many retailers are discounting their prices even as the festive season gets underway and there are good deals to be had.
Is it cheaper online? Do other shops sell the item for less? Charity shops can have hidden gems that are still in pristine condition or unopened packaging as items are often duplicates or bought in error. Not only can you save here, but you’re also helping a charity too.
Another tip is to have a backup gift for those you are buying for as, in this instance, it reduces the chances of purchasing something expensive in the spur of the moment.
The COVID-19 pandemic has established new patterns of consumption characterised, more often than not, by frugality. With the economy in such a state of flux, we tend to scrutinise every purchase and spend money only on things we genuinely require.
This shift in behaviour runs counter to the consumerist ethos of Christmas and raises the question of whether one should ‘splurge’ on Christmas gifts or be more cautious? Prioritising financial wellbeing, this year especially, has never been so crucial.
The Role of On-Demand Pay in UK ProductivityProject type
Reasons for AdvanceProject type
Payroll SavingsProject type
Application and FormsProject type
Work and WorkplaceProject type
Mental HealthProject type
Employee and Employee BenefitsProject type
Salary Advance and Salary FinanceProject type
How does it work?Project type
Can I get it?Project type
What is it?Project type
Mark Up, Loan Rate & Interest RateProject type
Reasons for LoansProject type
The Fintech Times | Behind the Idea: LevelProject type
TechRound | Interview with Stephen HollidayProject type