There’s no question; December is one of the most expensive months of the year. With the holiday festivities in the rear view and a new year dawning, now may be the perfect time to start preparing for the next go ’round. If the upcoming season seems very distant, and you think prepping now is getting ahead of yourself, consider the alternatives.
Are you grappling with post-holiday debt, working to catch-up after a brisk spending season? Is it a familiar pattern, leaving you in a financial hole year after year? If so, getting a jump on some of the inevitable year-end expenses could put you in a better position when the time comes to rev-up the holiday spending machine.
Start Saving Today
Effective money management anticipates spending demands, giving you time to set by money for the things you need. Saving for a house or car are natural, expected ways to get ready for major purchases. So why not save for the holidays? Too often, holiday spending is funded using revolving credit card accounts, which carry cumbersome interest rates. As balances grow and finance charges are added, the cost of Christmas is carried-over into the following year.
In practice, you may have grown accustomed to catching-up during the first quarter of each year – sometimes longer, chiseling away at your outstanding holiday balances. According to expert sources, for some Britons, payments will drag beyond April, reconciling charges that have been piled-on during the festive Christmas season. This credit cycle automatically leaves you a step behind, so it can be hard to break the pattern. Compared to carrying-over high interest debt, from month to month, you may be better-off selecting a short-term loan, to take advantage of the lower interest rates available on no-credit-check payday loans and other types of personal financing.
To avoid interest charges altogether, the Money Advice Trust (MAT) charity promotes a potential solution that could leave you in a better position than spending beyond your means in December. The organisation suggests beginning as soon as possible, preparing for the spending obligations you’ll face during the next festive season. The strategy is particularly helpful for families that struggle with debt, saving, and budgeting.
Survey Suggests Some Will Struggle
A survey conducted for MAT showed that most Britons will cope well, following the holiday spending season. According to the poll, 68 per cent of respondents didn’t anticipate financial problems ushering in the new year. Of those surveyed, however, 16 per cent felt as though they were likely or very likely to face financial difficulties in January, resulting from their holiday spending habits. If their personal predictions hold true, nearly 8 million people could be headed for financial trouble during the early part of the year.
The number indicates more people will encounter financial distress this January than experienced problems a year ago. A similar survey conducted last year identified 11 per cent of respondents bracing for challenges paying-off holiday debt.
Responding to this year’s poll, half of participants admitted that they first started saving for Christmas in December. To soften the blow this year, MAT suggests opening a credit union account designed to shore-up holiday reserves. These special savings accounts enable you to begin making deposits immediately and continue throughout the year. To ensure the money is available when it’s most needed, you are not permitted access to the funds until later in the year, as the holidays approach.
If you’re looking for better ways to account for holiday spending, and you want to start each year with a clean slate, locking away money in a dedicated credit union account could be the best approach.