Whatever your situation, your spending over the festive period will probably increase considerably. Follow this advice for the best chance of a debt free Christmas.
Jump to article content:
- Understand your current financial position
- Set your Christmas spending budget
- How to stick to your budget
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Understand your current financial position
Before embarking on your Christmas spending spree it is important to understand the current state of your finances. Do you actually know how much money you have coming in? How much of this has to be put aside to cover your normal monthly living expenses?
It is really easy get on top of this. First list out your income. This should include everything that comes into the household including any benefits. Then make a comprehensive list of all your essential household expenses.
Get a free copy of our living expenses guide – This lists all the essential expenses you should include in your household budget.
You now need to deduct the total of your expenses from the total of your income. The amount you are left with is known as your surplus or disposable income. This is the amount you can spend on Christmas extra’s.
If your surplus income is already more than used up paying your unsecured debts its time to get some advice. Give us a call (0800 077 6180) or complete the form below.
Set your Christmas spending budget
Setting a budget is possibly one of the most repeated phrases when considering financial management. This is because it is vital. If you do not decide the maximum you can spend in any situation you will always go over what you can really afford.
So, you have now reviewed your financial position and understood your surplus monthly income. This amount is your Christmas spending budget (unless you have savings to dip into). It is the maximum extra you have available to spend without getting into debt.
Write this figure down. The fact that you now know what it is means you are a long way towards achieving your goal of not overspending this Christmas.
If you want to avoid getting into debt (or more debt) this Christmas you must first calculate what your spending budget is.
How to stick to your budget and achieve a debt free Christmas
So you have now set your budget. However there is really very little point in having this unless you stick to it. But how do you do this when you are out on the high street and in bars and clubs with debit card in hand?
The answer is start a Money Diary. You need to keep a written record of everything you spend each day, even when you draw cash. This will help you see clearly what you are left with and take action if necessary. You will find it a pain at first. But it is easy to make into a habit if you are serious about sensible money management.
You will find that there are some days or weeks during the Christmas period when you overspend. However if you are using the money diary approach you will be aware of this overspend and be in a position to do something about it by reducing your spending in the following week.
If you are bad with keeping track of how much you are spending keeping a money diary will mean you always know what you have left in your budget.
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