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Have Yourself a Safe Consumer Christmas!

Have Yourself a Safe Consumer Christmas!

With the holiday season fast approaching many will be excited to begin the festivities with their friends and loved ones. Christmas is also an expensive time of year, and many begin to worry and organise finances as early as the summer months. Whether it’s money for a work Christmas do or a gift for your partner’s uncle’s son, we are often spending money we don’t have to keep up with the never-ending festivities. 

We all want to buy our loved ones the gifts they deserve and many end up getting themselves in unwanted debt to afford it all. From taking out a small loan to tide you over until that long-awaited January pay-day, to applying for store cards in August to afford gifts for the big day – many get themselves into debt, extending that Christmas hangover.

How do spending habits change during the festive period?

The Bank of England conducted a study on Christmas spending, they found that an average UK household spends £2,500 a month – but in the run up to Christmas, spending habits increase by 29%, spending almost £740 more. 

Consumers are also tempted to start spending earlier, with sale events such as Black Friday and Cyber Monday, which originally gained popularity in the States and have travelled across the pond. Consumers now eagerly await the deals they can grab from most retailers both on the high street and online.

StepChange Debt Charity reported in 2018 that nearly a third of respondents to their survey will be borrowing money to afford Christmas, and a quarter intended to use ‘buy now, pay later’ schemes. 

How will the COVID aftermath effect consumers’ Christmas?

From data collected in the above surveys, it’s clear that many heavily rely on borrowing money to afford the holiday season. The data was collected in 2018, just before COVID hit, and with economists reporting that the unemployment rate has risen to 4.8 – 5.5% in the last few months, concern grows for just how many will turn to consumer debt this Christmas. 

We all remember that Christmas 2020 was one to remember – and not necessarily for good reasons. The country was rife with fresh lockdowns, furlough schemes and businesses were shutting down faster than they were expecting to re-open. 

Fast-forward to this year: we are back – the high streets are busy, clubs and pubs full and people are gaining confidence in returning to work. Although this Christmas will be back to normality, it is questionable whether the population are back on their feet and ready for the financial festivities. 

How can I manage my finances better this Christmas?

After last year, we all want to go all-out with our Christmas celebrations. 

If you are worrying about how you are going to afford it all, here are three top tips on managing your finances for the Christmas period:

  • Budget, Budget, Budget: Think realistically with your finances. Create a plan of how much you will spend per-person and try to stick to it as much as you can.
  • Research your lending: If you decide to borrow money to afford the festivities check for hidden extras is any credit agreement. Do not borrow from unauthorised lenders and sometimes what people say you need can get you into more debt that you intend to.
  • Try to buy now and pay NOW: Avoid ‘buy now, pay later’ schemes. Although these sites can help to spread out the cost of payments, they can also build up dangerous debt if you are not careful. If you do choose to go with one of these schemes, it is more beneficial to pay smaller amounts over monthly instalments rather than choosing the ‘pay in 30 days’ option.

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