What’s the Average Post-Christmas Debt – and How to Manage Your Money to Reduce the Fallout

15.01.2020 by Jim Ker

We don’t mean to begin our first blog post of the year or indeed the decade, with a sobering fact like this one, but according to Your Money, Brits won’t clear their Christmas 2019 debt until summer 2020! There’s something a little alarming about that, don’t you think?

The piece suggests seven out of 10 people couldn’t comfortably afford Christmas, but instead found themselves ‘bowing to pressure’ to spend their hard-earned cash regardless, or perhaps worse still, turning to credit to pay for it. Nearly a third of people said they’d borrow money to cover the festive period, with a quarter of those admitting that they intended to use a ‘buy now, pay later’ scheme before Christmas.

Yule fun can cost you dear

So, what is the average post-Christmas debt – and what can we do about it? Across the country, the debt adds up to a bill of £3.5 billion, with festive spenders ‘borrowing an average of £200’ to cover the cost of presents, food and other Christmassy ‘necessities’. The figures come via The Mirror, which states that ‘yule fun can cost you dear’.

The iNews site backs up this fact, suggesting that many UK spenders don’t pay off their Christmas debt until way past March the following year. But the stress of Christmas debt can affect more than just your bank balance, says the article.

‘Seven per cent admit Christmas finances put a strain on relationships with friends and family’, iNews suggests, before adding that one in 10 people carry debt from loan or store cards into the new year.

Is ‘Keeping Up with the Joneses’ is to Blame?

The pressure to ‘keep up with the Joneses’ could well be the reason people get into debt in the first place. It’s a pressure that is there year after year, with The Independent highlighting back in 2017 that Brits are being driven into debt as a result of the pressure to provide ‘perfection’.

The Fear of Missing Out (FOMO) could be to blame, too, with people choosing evenings out and parties with friends over quiet nights in with family. Social media could also be the culprit behind the pressure to enjoy a Christmas worth photographing and sharing with friends. After all, few people want to see a sorry-looking festive TV dinner for one. We look at how FOMO can affect our wallets in more detail here.

Pull yourself out of post-Christmas debt

Of course, we can all take steps to pull ourselves well and truly out of post-Christmas debt and into the black.

Dry January provides a perfect excuse to stay away from the pub – and the lure of getting through the lull that is the beginning of a new year by spending money on evenings out. We can also make other positive changes, too, including hosting friends for dinner rather than booking that restaurant table; cancelling unnecessary online subscriptions; reducing our weekly spend on takeaway food, and cutting down on impulse purchases.

Set a Budget – and Stick to It

The Mirror has some advice we can adhere to when Christmas 2020 rolls around, though its tips can be extended to all kinds of occasions. The newspaper suggests setting a budget and sticking to it, using cash to work out how much you’re spending and leaving credit cards and debit cards at home, where possible.

When it comes to birthdays, agree with family and friends on a maximum spend for presents. During Christmas 2020, maybe consider doing a Secret Santa? Or just buying for younger relatives.

Compare prices before buying, too, checking for discount vouchers. One final top tip that has helped many keep on top of their seasonal expenses is to not get fooled by premium ranges. Buy things you normally enjoy.

Build Up a Christmas 2020 Fund Throughout the Year

A savings account may help you comfortably build up a nice Christmas fund well ahead of the festive season, with Kingston Unity offering several products for adult savers.

Money Advice Service has some information about supermarket savings clubs, which help you put money aside each time you do your weekly shop. Meanwhile, The Mirror claims you should start saving from at least August if you’re to comfortably cover Christmas spending.

In the piece, Damien Fahy, finance expert from Moneytothemasses.com, said: “Given the average family spends around £800 on Christmas, with 18 weeks to go, you need to set aside just over £40 a week if you don’t want to get into debt.”

Andrew Hagger, finance expert from MoneyComms, advises against using your credit card if you want to ensure a healthier bank balance over the festive period. Andrew states: “If you put £1,000 on your credit card for three months, it will potentially cost you nearly £50 in interest. That could have paid for your turkey – or a couple of presents.”

By making small changes to the way you view and manage your finances, you’ll be in a much more favourable position by the end of this year. Who here will be assessing the way they save – and spend – in 2020? Let us know how you manage your funds for the year ahead by getting in touch and letting us know your best tips for a financially healthier Christmas period.

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