We regularly bring you a column from Simon Read, a personal finance expert with extensive experience in helping people make the most of their money. In his last piece, Simon looked at the potential impact of rising interest rates on your personal finances.
Isn’t it great that Christmas is upon us? Season’s greetings to you all – but a warning too.
Yuletide is an expensive time: and if you don’t plan your spending, you could wake up in the New Year with a costly hangover.
Don’t get me wrong, I enjoy the time of goodwill and excess. But when you’re spending more than usual, you should take a more than usual interest in your spending. Frankly it comes right back to budgeting basics. If you plan your spending, then there’ll be no ghastly financial surprises. Experts at Deloitte reckon the average UK shopper will blow £542 this Christmas. That’ll be £283 on presents, £140 on food and drink, £63 on socialising and £56 on travel.
How does that compare to your plans? I know travel could be a lot more expensive, for instance, for those who have to visit family on the other side of the country! But, if you want to splash out at Christmas and can afford to then my advice is go for it. One of the basic tenets of good money management is ensuring you give yourself some fun money.
Without it life can turn into a series of fairly dull financial challenges where you’re always looking to maximize returns on your cash or ensure it’s working hard for your future happiness. But your happiness now is equally important so enjoy the chance to spend a little of your hard-earned and spread a little joy!
However here’s a serious warning: if you’re leaning on a credit card to cover the cost of Christmas, keep a close eye on it to ensure you can clear the debt in January. Nearly two in five families will pay for Christmas on plastic this year, reckons the charity National Debtline.
That’s fine if you’re doing so for convenience and will pay it off next month. But it’s dangerous if anyone puts stuff on a card because they can’t afford to pay it now. That creates worry and potential debt problems.
If you ever find yourself in that position take a step back and ask yourself if you really need to borrow to pay for whatever it is or if you can do without it. The bottom line is that Christmas is the season of goodwill, and people won’t complain if you don’t deliver an outrageously-expensive gift because you may have had to tighten the belt a little more this year.
With that in mind the New Year is a great time to make some positive resolutions. If you haven’t formulated some spending and saving plans for 2018 then make a list, check it twice, and plan to introduce some sensible money habits in January. You can start by running the rule over all your savings. If you have a nest-egg languishing in a building society or bank account then have a look at how much interest it’s paying. I can guarantee it will be relatively paltry.
Make one of your New Year’s resolutions to get more from your savings. You already know you can getter better returns with peer-to-peer lending. Now with the new Funding Circle ISA in the process of being rolled out to current investors, these returns can now be earned tax-free. For a balanced portfolio and looking over the longer term you could also look at opportunities in stock markets. Although with more potential Brexit turmoil ahead, that’s something to consider very carefully.
The key is to start the year on the right foot with a positive approach to your savings. Do so and you’ll end the year better off, and with more money to help pay for the Christmas excess of 2018!
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