Our research has found that millions of people relied on credit to pay for Christmas this year. And sadly many people are concerned their budgets will be squeezed even tighter next year. Are you one of them?
On the 23 December I took to the high street after work where I spent about four hours and £259. It’s stressful – devising and executing my entire Christmas-purchase strategy in a panic at rush hour, so I rewarded my efforts with a takeaway meal (£10) while I wrapped the presents. Pretty much the same thing happened last year.
Still, I don’t begrudge it one bit. You can’t put a price tag on the pleasure of meeting and sharing gifts with family and friends – and the expenditure and last-minute angst are an important part of the festive ritual.
While wages stand still and rising costs such as energy bills apply pressure to our household finances, a new Which? survey has found that one in five (18%) people have spent as much as usual on Christmas despite not being able to afford it.
With various travel costs thrown in (£90), my personal borrowing habits around this time of year broadly intersect with the average £350 found by the research. I’d also have to raise my hand as one of the 25% of people (13 million) who could only afford to pay for Christmas by borrowing: three quarters (76%) spending credit on presents, and 44% using it to pay for food.
And for different groups the costs escalate. 30-49 year-olds – who currently feel the most financially squeezed – typically borrow £490 to fund their festive spending. They’re also the most likely to have to dip into savings, withdrawing an average of £570.
It’s generally by around May or June that I make genuine headway in tackling the overdraft. I’m not alone here, either – with around 2.5 million saying it takes more than six months to pay off December’s debts.
Christmas on the cards
With Christmas-associated costs increasing, at some not-too-distant point I’ll inevitably find myself spending for one Christmas while still paying off the previous. If ever there was occasion for a New Year’s resolution, it seems now would be the time to shake the time-honoured habit of Christmas on the card.
There seem to be two means to this end: Improve the way I buy – pacing Christmas 2014’s shopping over the course of the whole year (rather than accruing a bombshell of debt over a few days in late December) – or simply buying less.
I’m optimistic that the former option is possible, as I’ve seen others succeed with it. But I’m also aware that if the good intention goes the way of most New Year resolutions, and I find myself back here at square one in a year’s time – it may be time to apply the same squeeze to next year’s festivities that many anticipate of household finances over next year.
Do you think you manage your Christmas costs effectively – and if so, what’s your secret? How are you planning on revitalising your finances in 2014?