It's easy to overspend at this time of year, what with those last-minute gifts that you just have to get, and all that food stocking supermarket aisles that looks far too tempting to resist. Hopefully you'll be using savings to cover the bulk of it – research from Aviva shows that UKsavers have amassed a collective festive savings pot of £8.5bn – but what if you blow the budget completely?
Many people are truly organised when it comes to the big festive spend, with 41% of respondents saying that they put money aside throughout the year to help pay for Christmas. In fact, the average festive savings pot totals £420 each, while 20% have been able to save more than £600 for Christmas. This could easily cover the typical budget, which most people set at £384.
However, despite the good savings intentions of many, the figures show that an even higher proportion of respondents (58%) don't put aside any money at all. A further 52% don't set a budget for their festive spend, either, and 53% have no buffer for unexpected costs, which results in 27% overspending or going into debt at this time of year.
It isn't hard to see how easy it is to overspend, either. A third (35%) of respondents admit that they always buy too much food, which means that 12% end up throwing food away every Christmas. Not only that, but a further 7% admit that they live a 'champagne lifestyle' for the festive period, and often try to live beyond their means.
Among those who have overspent at Christmas, more than half (53%) feel guilty about it – but 43% say they don't. Indeed, 53% of those say that they simply want to give their family the best Christmas possible, even if it means over-spending, while 16% say that they'll 'live for today, think about debt tomorrow'.
While the sentiment of wanting to give our families the best Christmas possible, no matter what the cost, is heart-warming, it's probably not the most sensible of way of looking at things. Debt could be a very real consequence and that could put your standard of living at risk for months or even years to come, which could have far more of a negative impact than simply buying fewer gifts.
The amount of debt can quickly add up, too: Aviva's research found that the highest Christmas debt people have ever started a New Year with stands at an average of £414 per person, rising to £519 among 45-54 year-olds. While this is never ideal, there could be a solution in the form of 0% balance transfer cards, which would allow them to spread the cost of the bills without interest adding to their debt.
It may be too late to start planning for Christmas 2015, but it's never too early to start planning for next year! If you've found that you're overspending and don't want to be in the same situation in 12 months' time, the key is to start saving as much as possible from as early as you can in the New Year, ideally in a dedicated account where you can keep the money separate from other savings goals. It needn't be much – little and often will soon add up – but it could make the world of difference next year.
"Christmas is typically an expensive time of the year with presents to buy and a busy calendar of festive events," commented Alistair McQueen of Aviva. "Plenty of people are careful to plan ahead for this, but it is also clear that many people go into debt as a result of their Christmas spending.
"Putting aside £1 each day for a year would virtually generate the typical Christmas savings pot, as well as avoiding starting the New Year off on the wrong foot by leaving yourself wrestling with extra debt. Setting a budget for Christmas is one simple step to make sure you don't overspend and can enjoy the festive season without worrying about your finances taking a heavy hit."
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