Can you afford Christmas - Scotland

Christmas is only a couple of weeks away and the bills are already beginning to mount. With presents to buy, cards to send and food to stock up on it is only too easy to spend more money than you intended.

However, keeping a tight grip on your purse strings during the festive period is essential if you are to avoid a financial headache in the new year.

It’s all too easy to get carried away with the Christmas spirit – not to mention the demands of excited children and, sometimes, adults – and buy lots of expensive presents and too much food that only goes to waste.

This is bad enough, but when spending is placed on credit or store cards it can be a recipe for disaster – and you could be spending the next year or more paying for it.

Recently there has been a plethora of stories in the press about the amount of money people will spend at Christmas, how much they overspend by, how much lenders are set to benefit and how many people are still paying off debts from last Christmas or Christmases prior to that.

In fact, our own research into the cost of borrowing on credit cards showed that in some instances it could take ten years to clear even relatively small balances of around £400 if only minimum payments are made each month – even with generous fixed-term zero percent deals.

There are ways of avoiding spending too much at Christmas, but they require a large serving of self-restraint and commitment.

One of the best ways is to budget for Christmas by starting to save as far ahead as possible. Putting away an amount of cash every month can help build a pot that will cover the cost of food and drink and perhaps even presents.

Ever since the collapse of Farepak, many people have been sceptical about putting their savings into vehicles such as this, but there are a number of savings accounts where your money is protected. These accounts also prevent you from dipping into them before December.

The advantage of using a bank account is that you know your money is safe and may also generate a decent level of interest. Supermarkets also offer Christmas savings schemes that give smaller incentives, such as discount vouchers or fund top ups but, generally, the interest gained on savings in a bank is likely to be better than these rewards and offer more flexibility.

As Christmas approaches it is also a good idea to make sure you have enough put aside to cover essential bills – such as electricity, gas, mortgage and car payments before you spend all the money on presents.

Covering these bills is important in order to avoid financial difficulties in the New Year – avoiding the risk of utilities being cut off or your mortgage falling into arrears.

If you do choose to use credit to cover the expense of Christmas, it is imperative that you ensure you can pay it off in a realistic time scale – there is a big difference between being able to service debt (make prompt, small repayments) and afford it (clear the balance within a few months). If you find yourself struggling with debt in the new year contact a free money advice provider, such as Newtomorrow.com, for advice sooner rather than later.