Are you an avid ‘how many sleeps until Christmas’ type? Or a ‘bah humbug’ scrooge? Either way, Christmas is nearly upon us and if the frantic frenzy surrounding Black Friday and Cyber Monday hasn’t already exhausted you, the nation’s clogged-up roads and shopping malls in the run-up to Christmas certainly will!
Christmas shoppers of all ages are desperately trying to get everything done in time and within this year’s cost of living crisis-induced tight budgets. Martin Lewis, the Money Saving Expert, has rightly been speaking about the burden of unnecessary gift-giving and how this joyous occasion shouldn’t cause us debt and worry. Inevitably, we can’t strike everyone off the Christmas gift list without upsetting someone along the way, so here are 5 often-forgotten financial tips that pretty much every festive shopper can refer to and use.
Tip 1: Buying online safely and securely
Ethically I would encourage people to use their local independent retailers (assuming they provide good service at reasonable prices). However, not everyone is blessed with a thriving local high street, and the convenience of the online giants is hard to ignore.
If, like the vast majority of us, you’re planning on shopping online this Christmas, make sure you don’t give away the gift of your personal data! Try not to use public WiFi and look for secure sites i.e. those with a small padlock symbol or https:// in the address bar.
For added security, do not save personal information or card details for next time.
Tip 2: Cash-back and reward credit cards
If your purchase is more than £100¹, consider paying with a credit card instead of a debit card; you’ll have greater protection and additional rights under Section 75 of the Consumer Credit Act². However, remember to always pay off your credit card in full each month to avoid incurring unwanted charges.
If you do pay your credit card bills off every month without incurring interest, then why not look at cash-back or reward cards to replace or complement your existing credit card? If it’s too late for your Christmas shopping how about applying for a suitable card and starting 2023 using one that gives you something back?
Most supermarkets also offer their own credit cards. Tesco, Asda, Sainsbury’s, Waitrose, and M&S all give you something extra for using their credit card in their own stores. Personally, I use my John Lewis/Waitrose Partnership card most of the time.
I have a deal with myself – the vouchers can only be spent on something that falls under the banner of ‘treat for me’ as a thank you from my family (even though they have no idea I do this). If I had a Tesco or Sainsbury’s credit card, I would just end up using the rewards to lower the food bill and, let’s face it, where’s the fun in that?
For a full selection of current credit cards and their relative merits please take a look at The Money Saving Expert website.
Tip 3: Delay Christmas!
I don’t mean writing to Santa and asking him to arrive in August, but you could take advantage of the post-Christmas discounts.
Gift cards are ideal for this. The receiver can bag themselves some bargains in the January sales, making your generous gift go that bit further. Plus, if the recipient lives too far away to hand deliver, just think of the postage costs and Post Office queuing you’ll save. All you have to do is pop a stamp on the envelope and off it goes!
Tip 4: Philanthropy
We can’t all set up multi-million-pound charities like the Chan Zuckerberg Initiative or Bill Gates Foundation, but we can remember that Christmas is a time for giving to those in need. I’m always mindful of how lucky I am to have a safe, warm home for my family and to be together, especially when so many don’t have that luxury. Christmas can be the best of times, but it can also be for some the worst. So, we sit down as a family and all agree on which charity we want to help each month for the next year, or sometimes instead, we will train for a sponsored activity. It doesn’t need to cost you anything, but it can really help a charity.
If you do donate to a charity, you can, of course, opt to allow the charity to claim Gift Aid, bagging them an additional 25p in the £.
Also, If you’re a higher or additional rate taxpayer and you make charitable donations, you can claim the difference between the rate you pay and the basic tax rate on your donation i.e. 20% or 25%.
For example, if you donate £100 to charity, the charity claims an extra £25 (i.e. 20%; the basic tax rate) to make your donation £125. If you pay tax at 40%, you can claim back 20% of £125 i.e. £25. If you pay tax at 45%, you can claim back 25% of £125 i.e. £31.25. (4)
There are two ways to do this. The first is to fill in a Self-Assessment tax return. Simple enough to do if you already have to complete a Self-Assessment. Alternatively, you can ask HMRC to adjust your tax code by phoning them and letting them know about your Gift Aid donations. See here for more details: Tax relief when you donate to a charity.
Tip 5: Keeping track of your expenses
Christmas invariably ends up costing more than expected. There’s always that small gift or decoration you weren’t planning on buying but couldn’t resist, and of course, there’s the cost of all that food and drink! It all adds up, so it’s worth keeping a record of how much you’re spending.
Reviewing your finances certainly isn’t a top priority just before Christmas, but why not make it a New Year’s resolution? Make sure you’re not paying over the odds for a mortgage, car or house insurance. Check you are not paying for a streaming service that no one watches or a gym membership you don’t use. All of these could free up cash to cover the cost of next Christmas, or just ease the squeeze in 2023.
We recommend you review your finances each year to ensure you have the most up-to-date policies, are on the best deal and check the general state of your finances.
So, once the festivities are over why not let one of our advisers steer you back on track and start 2023 with financial purpose?
On a scale of 1-10, how likely are you to spend more this Christmas than you’ve budgeted for? 1 = very unlikely, 10 = very likely. Let us know by adding a comment below.