Can I really afford to spend at Christmas, given the rising costs?

Are you someone thinking, “Let’s keep Christmas low-key this year?” However, the present exchange pact never goes out of the trend. It starts with something: “Shall we all agree not to buy anything for each other this time?” It does seem relieving now; however, the cart narrates a different story.

Most of you get caught up in “Just one more purchase”. The fact is, you cannot stop yourself from shopping during the festive season. You must have been waiting for this moment for a long time. However, can you really afford to spend so much this season?

It should be the immediate question given the rising costs. You don’t need to feel guilty if you cannot afford gifts this year. It may be a momentary wave of sadness, but it saves you some good pounds! The blog may help you explore the battle between “should you spend or not”. It may help you make a sound decision.

The Pressure to Spend is Real- But so are the aftermaths!

Christmas is the season of celebrating warmth, generosity, and bonds. However, it has also become seasonal financial anxiety. With rising food, rent, energy bills, and stagnant incomes, many households ask the same question, “Can I really afford to spend at Christmas this year?”

Undoubtedly, the occasion comes with expectations, gifts, parties, travel, and decorations. Following every tradition with pending credit card debt and reduced income is challenging. So, what can you do?

Strategies to understand whether you can afford a Christmas

Overspending during December can create financial risks. Therefore, it is important to understand your finances and make wise choices. Here are some tips that may help you there:

1) Start with an Honest Financial assessment

It is important to consider the 3 most important aspects before spending:

• Analyse your take-home pay and essential bills. Check what you have available to spend without breaking the budget.
• Do you have any non-negotiable expenses- like rent, utility bills, credit cards, and car loan payments?
• What’s left without relying on credit? This is your real budget after repaying the important payments.

2) Create a workable Christmas budget

You don’t need to use all the mathematics or cut the essential requirements. It may help you buy items, but you may face serious consequences later. Instead, analyse your finances and create a budget. Here is how you can simplify it:

Thus, you can clearly see the difference between the actual costs and the amount you can afford to spend. It may prove unnecessary, but it may help you save an amount of money and prevent overspending.

3) Spend smart, not empty out the purse

You don’t have to spend or empty your wallet just to have the best Christmas. Here are some effective ways to reduce the costs:

• Switch to Secret Santa for adults
• Set price caps for presents. It will help you buy a gift within a particular amount
• Start saving £10 every day until Christmas arrives. You can save more, but decide according to your daily expenses
• Cut back on premium items, like a subscription for a few days
• Shop early or benefit from Black Friday sales

4) Check dependency on Credit cards

Most individuals spend the most on Credit cards. You may be eager to check out new credit cards to benefit from the introductory period here. It helps you shop without incurring any interest on the card. It helps you pay only for what you buy.

No matter how tempting it may seem to use BNPL, Credit cards, store finance, and overdrafts, keep a distance. Or if you cannot stop it altogether, ensure responsible spending and usage. Most individuals do not stop even when they have pending bills in their profile. Thus, if considering unsecured personal loans with bad credit, ask yourself the following questions:

• Can I repay the amount plus interest by the loan term’s end?
• Will this loan affect my January bill payments?
• Am I borrowing due to pressure or just for instinct-based purchases?

Having answers to these questions helps you understand the need for the loan. Plus, it will help you borrow a realistically affordable amount.

5) Communicate your concerns

The greatest remedy and therapy for your darkest thoughts is speaking up. Consider someone you share a great bond with and open up to. Identify and highlight the financial struggles and pains you are going through. What are the reasons behind them?

The person may help you overcome the stress and suggest a solution. It is always better to share than to bottle up concerns. Moreover, it gives a clear hint that you cannot spend much, and hence it automatically lowers the expectations.

6) Predict the bills!

Yes, this strategy helps most individuals lower their expenses. Instead, it helps you only spend a realistic amount that does not affect your finances and Christmas needs. Having a clear idea of the January bills to expect may help you save money early. Here is an overview of the bills that you counter after Christmas:

• Tax payments (HMRC)
• Credit card bill payments
• Personal loan payments
• Overdrafts
• Payday expenses
• Rent

Thus, don’t leave these to another weekend. Do it immediately to understand your spending potential better.

Bottom line

Thus, whether you can afford Christmas depends on your priorities, income, occasion goals, expectations, and other bills. Never extend the budget if you struggle to meet other ends.

Instead, analyse the actual amount you can comfortably spend by creating a practical budget. Identify the bills and other monthly liabilities, check your savings, and Christmas needs. It will help you get the approximate amount you can spend. In this way, you can have a budget-friendly Christmas without affecting other payments.

Description: If you want to know whether you can afford Christmas, read ahead. The blog lists the possibilities with an explanation.

Emma Parker

Emma Parker is a financial counsellor at LondonLoansBank and has been serving for over 5 years. She is a psychology graduate from the University of Glasgow. Since she has keen interest in the finance field, she pursued a diploma course in banking and finance that led her to opt for her current career. She assists people choose the best loan based on their current financial situation and credit score. As Emma understands how people react to money problems, she gives them a helping hand to solve their financial complications.