As Ebenezer Scrooge once observed, the festive season can be expensive. Enjoy good cheer all year round with wisdom from Christmases Past, Present and Yet to Come.
Scrooge is probably the most famous of all Charles Dickens’s creations. He’s also, perhaps, the most misunderstood. You probably remember him as just a selfish old miser. What people forget is that he had good reasons for his penny-pinching ways. The Ghost of Christmas Past shows us a deprived child and a hard-up young man, desperate to escape his former circumstances. It isn’t really nastiness that makes Ebenezer what he becomes – it’s fear that he might end up that way again.
Of course, Scrooge learns his lesson just in time, after receiving some heavy-duty advice. But he could have saved himself a lot of trouble – and terror – if he’d seen a different kind of adviser much sooner. He could then have enjoyed a life of financial ease without having to be so mean or miss out on the joys of Christmas.
We’ve summoned up our own three Spirits of advice so that you can feel secure without being a Scrooge.
Lessons of Christmas Past
Here are a few blunders that you may have made in the past – perhaps sending a ghostly chill through your finances.
Spending more money than thought
Have you splashed out on flash gifts to impress someone, only for the items to gather dust? Think harder about what loved ones will really value and use, and your money won’t be wasted.
Social media rivalries
There’s huge online peer pressure to be seen to be having the perfect Christmas. If you’ve ever bought extravagant decorations, Christmas crackers containing jewellery or electronics, or far too many presents for your kids just so you can post impressive photos on Instagram (yes, we’re onto you), then take a step back and ask yourself if it was worth it.
Christmas treat angst
It’s the obvious time of year for a big day out to see a panto, show or circus. The trouble is, promoters know it. Taking a family of four on this kind of treat can cost as much as a small holiday, once you factor in the costs of tickets, travel and eating out. Instead of using up half your Christmas budget this year, consider cheaper ways to have quality time together – or delay for a few weeks until prices have dropped.
Letting Christmas catch you by surprise
Christmas comes every year, and it’s always costly – yet somehow you keep forgetting to budget for it. This year, work out how much more you spend over the holiday, divide it by twelve, and add this amount to your monthly savings plan. That way, next Christmas should be paid for in advance with much less last-minute stress.
Tips for Christmas Present
No, not just tips on what presents to buy, but general wisdom and insights for the here and now.
Combine gifts with charity
For the right person, a carefully chosen charitable donation can be the perfect gift. Sponsoring a child, an endangered species or another good cause will help you both feel the Christmas spirit, while providing a sponsorship pack that can be unwrapped on the day. If you choose your recipient wisely, this could be far better received than a more materialistic gift – so don’t be afraid to be different.
You can ease the annual guilt of over-indulgence by giving up some of your time during the winter break period. Charities such as Crisis, FoodCycle, Age UK and Re-engage are always in need of extra help at this time of year. Delegate some of your domestic festive duties to a family member and lend a hand to those less fortunate. You’ll enjoy your own Christmas all the more.
Remember that charity can save you money too
If you’re a higher rate taxpayer and you make charitable donations using Gift Aid, you can claim back the difference between your rate of tax and the basic rate – that is, £25 for every £100 you donate. You can do this through your tax return.
You can save even more tax if you plan to leave money to charity in your will. Money bequeathed to charity is exempt from inheritance tax, and if you give away at least 10 per cent of your estate then the overall rate of inheritance tax drops from 40 per cent to 36 per cent.
Don’t waste the bonus
If you’re lucky enough to get a Christmas bonus in your pay packet, resist the urge to blow it all on extra lights. If you’ve haven’t let Christmas catch you by surprise (see above) you should aim to put at least some of it aside for a rainy / snowy day. You have a number of options here: put it into savings, invest it, add to your children’s savings, make an overpayment on your mortgage, or even make an extra pension contribution to benefit from additional tax relief.
Guidance for Christmas Yet to Come
The future is nothing to be scared of. By looking ahead, you can be ready to enjoy it when the time comes.
It’s the simplest advice, but saving little and often is by far the best way to build up your spending power. Think of saving as a way to focus your efforts on the things that really matter, rather than letting your hard work go to waste on trivial things that don’t make you happy.
Invest for the future
Christmas is the time for children – and if you have children, you also have some easily foreseeable financial goals. For instance, you know when they’ll start and leave school, and when they’ll reach adulthood, so you can plan a long-term investment strategy as soon as they’re born – or even sooner.
Think of the elderly (that’s you, in the future!)
Give your future self the ultimate Christmas present by planning your retirement income a long way in advance. The earlier you can optimise your pension plans, the more comfortably-off you’ll be when you finally stop work.
Consider all of life’s milestones
Advice is for life, not just for Christmas. Remember all the key moments in your lifetime when advice or a little extra guidance can make a big difference. Never face the future unprepared!
This article was previously published by Unbiased on 9th December 2019