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Here's a Christmas gift that won't cost you a penny

by Sarah-Jayne Dunn, CAS Policy Manager, Financial Health.

This article first appeared in the Herald on 16 December 2020.

‘Tis the season for giving, and I am going to give you the chance here to avoid a very common trap that exists at this time of the year.

The trap I’m talking about is how easy it is to spend more than you can afford at Christmas time, which can lead to the misery of a debt hangover in the New Year.

Polling for CAS recently revealed that a worrying 16 per cent of people plan to take on some form of debt this Christmas.  And our fear is that if that many openly say they intend to get into  debt, a lot more will end up actually doing so.

When asked why, many people cited wanting to treat their family after a tough year.  And that’s how easy it is to fall into the trap.  We can all understand the desire to give our family a great time,  especially after this year. We don’t just need a proper Christmas, we deserve one!

And whether it’s wanting to make sure that the children have that toy or those trainers they’ve been obsessing about, or giving our extended family a gift to cheer them up to compensate  for not spending Christmas together like we used to, it’s easy to feel that  this year we all deserve a special treat. Granny would love that coat, Uncle Peter would look great in that sweater. Oh look they’re offering Buy Now Pay Later….

The last week or so before the big day sees the final sprint for that perfect Christmas, and this is when most of us are at our most vulnerable to the trap.

If you’ve completed all your shopping by now, well done. But for most of us the next eight days will be a blur of last-minute buying.

Traders will use this time with early sales to lure you to spend more and get as much money out of you as possible. But you don’t need to fall for it.  You can avoid it.

Firstly, planning is key; don’t rush out or online and buy the first thing you can find because you’re worried it won’t arrive before Christmas.  Sit down, take a breath and work out a list of how much money you can afford to spend.  Be honest about this.  Then make a list of all the things you want to buy.

You can research prices online and make sure you shop around for the best ones.  Next match up these two lists and check them, twice. Now when you start your shopping, you have a plan in mind.  Simply stick to it and keep a note of what you are actually spending so you know how close you are to your overall limit.

Secondly, avoid special offers. Remember, the shop exists to sell things.  It’s trying to get you to spend more money.  Do you really need those two extra items in the “three for two” deal?  Because if you don’t, it’s not the bargain it seems: you’re actually throwing away money. Just buy the single item you wanted – and  budgeted for.  You’re not missing out on anything there. In fact, you can quietly congratulate yourself for avoiding  that trap.

The same applies to that “XX% off” deal. It’s only really an “unmissable offer” if you can afford to pay the balance and if you wanted the item in the first place.  If not, they’ve just shrewdly hooked you into paying money you can’t  afford for something you don’t really need.

Finally, another thing to bear in mind when working out your budget is to remember your New Year bills.  Most people in December are paid early and this means it can be five to six weeks before you will receive your next pay.  Any bills you have in January will need to be paid from your December wages, and the bills which land in January tend to be higher than usual.  You don’t want to be paying off shop debts or credit card debts at the same time.

I’ll let you into a secret now. Writing a column like this is quite hard, as it can feel like it’s been written by Ebenezer Scrooge!

Of course, I want you to have a great Christmas. And yes, you and your family absolutely deserve it. And yes, buying nice things is one of the best ways to get there.

Nor am I suggesting that any of this is easy. Heaven knows, even when money is strained, the temptations of Christmas can be enticing. So please don’t think I’m under-estimating the challenge of setting a budget and sticking to it.

The trouble is, I’ve also worked in the advice sector for over a decade. Year after year, I’ve sat in those CAB advice rooms in January/February with people who are in tears because they fell into the seasonal spending trap.  Sure they had a good Christmas, but now they’re having to sit in the dark with no heating, worrying how they’re going to feed their family and pay their bills.  Credit card ratings go downhill, along with your mental health, and the trudge to the food bank makes Christmas seem a long time ago.

So I’ll risk being seen as the Grinch if this message reaches one person and saves them from that misery. Avoid the trap.  Make a plan. Have a great Christmas – and a debt-free 2021 as well.