Top tips to avoid falling into debt this Christmas

With just over 30 days to go until Christmas, the countdown has begun and the festive rush to buy seasonal goods is well and truly on.

Despite all the joy and family fun, Christmas cheer is undoubtedly costly and many could find themselves in debt as a result of seasonal spending.

Brits will spend an average of £445 per person this year, marking a 1.8% increase on last year’s figures. According to a price comparison website, the nation will collectively spend £22 billion this Christmas.

A survey of over 2,000 Brits found that the highest spenders will be 35-54 year olds, who are set to rack up a massive £491 per person on average.

Those aged 55 and over will spend £423 per person and the figure will be £415 for those aged 18 to 34 years.

Residents in the North East are the most generous, spending an average of £595 per person followed by shoppers in Wales at £531. Shoppers in the East Midlands are expecting to spend the least, averaging just £355 each.

Whilst Brits are keen to splash the cash, this could land them in Christmas debt. Worryingly, one in five expects (19%) shoppers expect Christmas spending to get them into debt this year.

This number increases to one in four (25%) for those aged 18-34 as financial pressures continue to grow for hard-up Brits. The research found that only 15% of UK adults believe their December salary will be enough to cover the cost of Christmas.

Clare Francis, financial expert at MoneySupermarket said: “Christmas shopping is a significant area of expenditure for parents in particular. And with only one pay day left for most people until Christmas, it is important to take steps now to manage your finances in the run up to the big day – and beyond.

“Only 37 per cent will fund Christmas using disposable income this year with an encouraging 34 per cent planning to use their savings. Using a credit or store card was the next most popular option for one in ten.”
Top tips to avoid Christmas debt

1. Set a budget and stick to it

One way to manage your Christmas spending is setting a budget and sticking to it. The bright festive lights of High Streets and decorative window displays across the country might draw you in to buy more gifts, but don’t be tempted to overspend and land yourself in debt.

The research found that a quarter (24%) of parents said they will set a budget for their children’s gifts and not exceed it. However, just over a third (35%) of people plan to set a budget and might go over it, while 27% of those polled said they would not be setting a budget  of any kind.

Setting a budget allows you to keep track of your spending and not let it get out of control.

2. Don’t create more debt

The last thing you want to do is take on more debt and increase the amount you owe, pushing you further into debt.

To avoid spiralling into debt further, don’t continue to spend beyond your means.

Credit cards, personal loans and overdrafts can be useful, providing that you never miss a payment and replace the balance in full. However, they are bad news for many, who should avoid buying what they cannot afford. More than 2 million Brits turned to credit cards to get through January to cover everyday costs following the festive season.

More than a third of credit card users relied on plastic for everyday essentials in January, 2012, according to the Post Office.

The MoneySupermarket figures show that 10% of people plan on using their credit card to cover the cost of Christmas. Some 3% are using their overdraft and 1.7% are planning on borrowing money from friends and family to fund the festivities.

3. Spread the cost

By planning ahead you can help to ease the financial pains of Christmas. Don’t forget that the cost of bills is likely to continue into the New Year, so it could be worth putting some money aside to deal with these.

Spreading out the cost of Christmas could make life a lot easier on your finances, instead of blowing all your hard-earned cash in one short period. It could be worth seeing if you are eligible for a 0% credit card or other low-interest rate credit deals to make purchases interest free, making the festive season more affordable.

Compare credit cards with Propertywide.