Last Friday marked the 100-day countdown to Christmas, which means now's the time to start planning! It may seem too early to think about such things, but if you don't want to be paying for the festive season long into the New Year, it's worth getting on top of things now – and if you haven't already done so, setting up a savings account should be at the top of the agenda.
Research from Halifax found that the average cost of last Christmas clocked in at £506, which means if you're yet to start saving, you'll want to put aside around £36 a week to cover the cost by the big day – and if you don't want to leave everything until the last minute, you'll have to boost your weekly savings pot accordingly.
There's a chance you'll need to save even more though, judging by recent increases – 2015's festive total of £506, which covers all spending on gifts, food, drink and socialising, marks an increase of 8% on 2014's festive spend, so you may be in for a surprise this year as well. Indeed, 29% of respondents admitted to spending more last year than they did the year previously, and of those, 18% completely blew their budget by spending over £200 more.
Unfortunately, failing to be prepared could have long-term consequences. The survey found that 31% of respondents still had outstanding payments at the start of February, and of those, their festive payoffs were expected to last until April. As a result, 34% were concerned they may have to make cutbacks on non-essential spending to pay for the excess of the previous Christmas, while 12% thought they'd have to forego a holiday and one in 10 even made cutbacks to food shopping.
Start your festive fund!
If you don't want to have a hangover of the financial variety, it's vital to get saving as soon as possible. Hopefully you'll already have a dedicated savings fund for this very reason – 34% of Halifax's respondents saved specifically for Christmas – but if not, it's time to get in on the action!
Of course, there are other options, such as funding some of the festive spend through your salary (55%), but if it doesn't go far enough, you may end up looking for other means. Indeed, 31% of respondents relied on some form of credit, with credit cards being the most popular choice (26%), but this could lead to unnecessary debt that could take far too long to pay off. A further 7% dipped into savings that they weren't planning to spend on Christmas, and if you're sacrificing your emergency fund or perhaps a long-term savings pot, it could take a while to make up the difference.
Having a savings account that's specifically for Christmas will always be your best bet. At this time of year, you'll probably want to look to an easy access account that'll let you add funds at will – and perhaps more importantly, withdraw it when you're ready to shop. However, you may also want to think outside the box and consider getting a new current account, particularly one that comes with cash incentives for switching – this could be a great boost to your festive fund, and better yet, it'll allow you to access your cash at any time.
"With the typical cost of Christmas increasing to over £500 and the hangover stretching to a third of the year for some, it's never too early to think about how you will pay for it," said Giles Martin, head of Halifax Savings. "If you can afford to save regularly to spread the cost, then the earlier you start saving the less you need to find each month."
Get started! Compare savings accounts and current accounts to get ahead of the game, and hopefully you'll avoid a financial hangover.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.