Monday, 31 December 2012

Start Planning for Christmas and Everything Else Too?

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Listening to the Radio on  the way into work this morning, and it turns out that nearly half of us have used some form of debt to pay for Christmas this year.

According to the BBC, the average amount put on credit cards, overdrafts and the like is just over £300.

Combined with this, the news also told me that several retailers had record sales figures on Boxing Day as well this year.

What's going on?

It appears as usual, people's bank balances are suffering from consumerismitis and short termism. Could it really be that hard to save £100 a month from September onwards?

Perhaps it is. If so, why not start saving now? I know, I wouldn't be disciplined enough to do that either, but there are ways and means.

For instance, a lot of supermarkets have a "stamp" scheme or something similar. You buy them at the supermarket for a £1 each, and stick them on a collecting card, then when you're ready, you can go and spend them in store. By simply buying a couple of stamps every week, come Christmas you'll have £100 to spend that won't be coming out of your monthly budget, and let's face it, if you're doing the family dinner, your food bill will be a lot bigger than usual.

Talking of supermarkets, Morrisons have recently launched a gift card scheme, not just for themselves but for other retailers as well, and there's also a great incentive. For every £10 worth of gift card you buy, you get 1p a litre of your fuel bill at their service station. Buy every one a gift card and save money at the same time!

It doesn't have to be presents though, and they're still doing the deal now, in fact, it looks like it may be a permanent fixture - Morrisons gift card partners. With useful partners like Boots and Halfords, next time you need to do some car repairs or buy some toiletries, you can save. Or alternatively, as it gets towards Christmas again, you can buy gift cards for those difficult relatives that you never know what to get for Christmas. Just be aware of any expiry date, (this is usually 12 months from purchase), and don't forget to tell them when that is.

This is similar to how some people I know buy Christmas gifts all the time, they wait for the January sales...

Firstly, if you aren't going to see the recipient until after Christmas, remember, you don't have to buy their gift until just before you see them, and with the sales on, isn't it an ideal time to buy next year's gifts too?

Staggering your bill payments can help with Christmas too.

For example, I pay my council tax (a form of property tax in the UK) each year, on a monthly basis over 10 months, the last instalment due in January. This year I have cancelled the arrangement, so by the time the Council notice I haven't paid the last one, it'll be February anyway, making January easier for us. Then for the future, I'm going to slightly overpay each month, or start paying a month early, (I haven't decided yet), so that my last instalment for 2013/14 will be the beginning of December, making January 2014 easier to swallow.

Really, the simple act of planning can help make life easier. You can apply this elsewhere in your life too.

Some bigger bills are expected, but they still catch a lot of people out, for example, when your car needs taxing. It happens every year if you own a car, but many people fail to budget for this. The worst thing though, is that you pay more per month when you buy 6 months of tax than if you bought a full twelve months. As happens so often with finance, those who can't afford it, end up paying more.

It would probably help if banks offered a service where money was assigned to different "pots" to save for different things, but of course they don't. When people forget stuff, banks make money, and it would cost them to offer a useful service such as this.

You might have wondered why I haven't mentioned emergency funds at this point. Mainly because, taxing your car is not an unforeseen emergency. You can see the bill coming from at least 6 months away. This is the root of the problem though. As it's so far into the future, people put it to one side and forget about it, then they have to pay out a big chuck of their wage one month, which makes getting through that month tougher than it should be, but it needn't be that way:

Let me introduce you to a useful service the Post Office have, called the Post Office Budget Card.

The idea is you pay a bit into it every so often, (I would recommend monthly). You can put between £5 and £250 on it at a time, and save upto £1,500 in total. You can use it to pay all sorts of bills, (electricity, gas, some catalogues etc.), and also car tax. So, put £20 a month on it, and when the bill comes, you'll already have the money.

I should also mention at this point, that it's not a cash card. You CAN withdraw the cash from it, but you have to write to the Post Office beforehand, and then take their reply to your local branch in order to obtain the money. They don't pay any interest and they charge you £5 for the privilege.
So why would I recommend such a thing? 
Simple. If you know you're not that good with money, and you have difficulty sticking to a savings plan, one of these can really work for you. You can't spend the money if you're tempted to, but you can pay your bills when you need to.

So in conclusion, at this time of year, you're probably already doing a bit of planning. You're thinking about the New Year ahead, and maybe considering making a few resolutions. Well why not take a bit more time out, and do some financial planning, and make 2013 easier on yourself and your wallet?

Happy New Year to you All and may it be a fruitful one :)

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