Saving for Christmas – our tips for 2021

Given the supply chain issues affecting our ability to shop right now, it’s no surprise that we’re all being advised to plan ahead to make sure we can get hold of Christmas gifts and food in time.

And when you’re on a debt solution, it’s especially important to start to think about budgeting for and saving for this expensive time of year as early as you can! So even though it’s all looking a bit more Halloweeny than Christmassy at the moment, we’ve put together a guide on saving for the festive season – plus a few tips on how to spend a bit less.

Sell some stuff for Christmas cash

First of all, let’s get a bit of extra money in your pockets in time for all that Christmas shopping. Check out our blog on the best apps for selling your unwanted stuff. After all, if Father Christmas sees a lot of clutter in your room he won’t think you need any new toys… (did anyone else’s Mum tell them that when they were kids? Just me?)

Spread the cost

Try to spread purchases out over Oct, Nov and Dec to minimise the impact on your budget.  Draw up a budget for those three months to see how much money you could potentially put aside – then set that as your Christmas budget (and stick to it!).

Spending less this Christmas

Here are our tips to help you save money:

• Exchange homemade gifts. If you have the time, a homemade gift can be a less expensive, more thoughtful alternative to a shop-bought gift. We like this list of 100 great homemade gift ideas by The Spruce.
• Agree to give fewer gifts. Got a big family or a large friendship group? Opt for Secret Santa, or a ‘presents for children only’ rule, or simply see if anyone else is up for not exchanging gifts this year. Christmas is about more than presents, after all.
• Book train tickets in advance. It’s a bit of a sore subject, given what happened last year. But if you are planning to travel to visit family around the Christmas period, your tickets will be cheaper if you buy them in advance around now. (Probably best to give some thought to the cancellation policy, just in case.)
• Do Christmas dinner on a budget with a little help from us.

Choose a Christmas savings account

Supermarket savings schemes

Asda, Co-op, Iceland, Morrisons and Tesco are among the supermarkets offering Christmas savings schemes. Some schemes involve saving all year round; others involve collecting coupons in the run-up to Christmas.

There are some drawbacks to these schemes. For one thing, you can only spend the money you save in that particular supermarket. (Check whether the scheme you’re interested in will allow you to shop online.)

Also, these schemes aren’t backed up by the Financial Services Compensation Scheme (FSCS). This means if a company goes bust, the customers with the scheme won’t get their money back, in the same way they would if you their money was in bank accounts. That might seem unlikely with a large supermarket chain, but it’s not impossible.

However, there are upsides. The schemes usually pay out a bonus if you save a certain amount – and the bonus is usually more than you would receive in interest if you saved the same amount of money in the bank. And unlike interest, the bonus is usually based on how much you’ve saved by a particular day. So you can reduce the risk of taking part in one of these schemes by waiting until the relevant date to pay your savings in.

Other ways to save

You could also save for Christmas in a bank or building society savings account or a cash ISA. All of these are FSCS-protected, and they might pay you some interest. (Don’t expect much, though: interest rates are very low at the moment). Some banks offer specific accounts for Christmas savings.

And here are some ideas for next Christmas…

 Christmas savings clubs

These work in a similar way to the supermarket savings schemes – they’re not tied to a supermarket, but they usually involve saving, year-round, for purchases that can only be bought through the club. These might be toys, food and drink hampers, or gift cards and vouchers for specific retailers.

You don’t receive any interest or bonuses on the amount you’ve saved, and you usually can’t take your money out of a Christmas club without paying a cancellation fee. And again, there’s no FSCS protection if a Christmas club scheme goes bust – which has happened in the past, for example with Farepak in 2006.

But there is a voluntary group of Christmas clubs which might protect at least some of your money. It’s called the Christmas Prepayment Association (CPA). So if you’re thinking about joining a Christmas club, check the CPA website to see if the club you’re interested in is a member.

And check the club’s reviews from previous customers, too, to make sure the items available to purchase are of a good quality and value for money.

Credit union Christmas clubs

These are similar to other Christmas clubs but with a number of advantages:

• your savings will be protected by the FSCS
• you’ll get access to your savings in cash, so you can spend it on whatever you want
• and you should be paid a dividend on your savings too. Who could say no to a bit of free Christmas cash?

If you’re already a credit union member, get in touch and ask if they have a Christmas club. To look for credit unions you might be eligible to join, visit findyourcreditunion.co.uk.

Help To Save

Check if you’re eligible for a Help To Save account – if you are, you could receive free bonus cash from the government. Last year they paid the bonus just in time for Christmas! Find out more at gov.uk.

Be sure you understand the terms and conditions of whichever savings option you choose – in particular, whether you’ll be able to take your money out if you need it. Part of the appeal of many Christmas accounts and schemes is that you can’t spend your money until it’s time for Christmas shopping. But if you don’t have any other savings, you might need to be able to access this cash in case of a rainy day, or for other occasions such as birthdays.

 

Whichever way you choose to save, the important thing is that you do it! Regular saving is a hugely important habit to maintain. And having that extra cash available when December rolls around will help you avoid struggling financially over the Christmas period or in January.

But remember, we’re always here to help – so if you do find yourself getting into more financial difficulty at Christmas, the New Year or any other time, get in touch and we’ll see what we can do.