How can you make Christmas more affordable?
3 MIN READ
Christmas can be expensive. Last year, Retail Ireland predicted that Irish households would spend an average €870 more at Christmas than any other month of the year.
Finding an extra €870 can be a challenge, especially when there are only a few weeks to go before Christmas.
So what’s the best way to make Christmas affordable?
Making a list and checking it twice
A good guide to what you might spend this Christmas is how much you spent last year. If you can quickly come up with a figure for your Christmas spending that’s great. But many of us might struggle to be that precise.
To find out what you spent last year, make a list of the presents, food, travel and activities you paid for. Use your bank statements, credit card statements and receipts to help you.
You might not get everything but at least you’ll get a better idea. Then add it all up to get your Christmas budget total.
The cost of Christmas past
Now you know the cost of Christmas last year, how did you pay for it? Did you save the money ahead of time, borrow the money or use a mixture of savings and borrowings?
If you have savings that you can use to pay for Christmas then this is usually going to be the cheapest option but remember to build up your savings again as soon as you can.
If you paid using a loan or a credit card and had to pay interest then you might want to look to see if you can find the money in other ways.
Creating a gift list
Set a limit on what you’ll spend this Christmas right from the start.
Create a list with the names of everyone you plan to buy a gift for and, working back from what you can afford, set a price limit for each of them. Then add in the money you can afford to spend on groceries, the tree and decorations, travel and socialising.
You might want to have a chat with your partner and family members to agree a spending limit for presents so that everyone spends roughly the same.
Christmas saving all year round
Ideally, we’d all start saving in January and save regularly every month to December. Putting away €72 a month or €17 a week from January onwards would build up a Christmas budget of €870 by the time sleigh bells are ringing.
That’s roughly the equivalent of setting aside the cost of a cup of coffee a day for a year.
But we all know that things don’t always work out that way and we can sometimes leave it a little late.
Traditional ways to spread the cost of Christmas
Traditionally, as it gets closer to Christmas people have used Christmas clubs to help them spread the cost.
Setting aside money at their local butchers, for example, to pay for the festive feast or putting a deposit down at a toy shop for this year’s must-have and paying the rest in instalments in the run up to Santy’s visit.
Clubs can work well if you’re happy with committing to a specific shop but what if you prefer to spend at several different shops and online?
Saving all year round using envelopes
Some people use envelopes to set aside money for specific purposes and have a Christmas envelope they put spare cash into each week to build up enough money for Christmas.
The only drawback with a Christmas envelope is that it can be tempting to raid an envelope full of cash when a bill comes in during the year and has to be paid.
Automating your saving
If you want to reduce the temptation to dig into your Christmas savings or to skip saving altogether, it can be helpful to set up a standing order to pay the money from your current account into a Bank of Ireland demand deposit account, notice account or regular saving account as soon as you get paid.
When the money goes automatically into your savings account, you are more likely to save it.
Keeping your savings just out of reach but available when you need them can help make sure that the money is still there when Rudolph puts hoof to roof.
What if you have to borrow to pay for Christmas?
Sometimes you can’t save up the money in time and can’t avoid borrowing for Christmas. If you have to borrow then it’s helpful to have a clear plan for repaying the money instead of leaving it open-ended.
For example, if you plan to borrow €870 and can’t afford to pay off your credit card balance in January you could decide that you will pay off the balance in 3 months, 4 months or 6 months.
But remember you’ll pay interest at the rate shown by your card’s APR as well.
Borrowing for larger items
At Christmas time, as well as the presents, we sometimes have to buy larger, expensive items such as furniture and electrical goods for the home.
Bank of Ireland Mastercard credit card holders can now spread the cost of items over €500 using an instalment plan at a lower rate* of 6.9% Annual Percentage Rate variable.
The cost is paid off in 12 equal monthly instalments.
Christmas resolutions for 2019
You may have left it late to save for Christmas this year but you can still use a gift list and set yourself a budget for the festive season.
You can always make a New Year’s resolution to make Christmas more affordable next year by starting saving in January.
Find out more
If you want to know more about Bank of Ireland’s credit card instalment plan, please click here.
*Refers to Bank of Ireland’s lowest standard personal loan rate under €20,000 and overdraft rate as of 29 May 2018.
Maximum of two purchases on an Instalment Plan at any one time. The total of all purchases you put onto Instalment Plan option can be up to a total of 80% of the credit limit on your card.
APR variable rate
Total cost of credit
Monthly instalment amount