John Ellmore of excellently named financial nous outfit Nerdwallet has some seasonal advice to help working dads keep a reign on spending
John Ellmore is Director for NerdWallet , an independent financial comparison website on a mission to provide clarity for all of life’s financial decisions. He’s some helpful advice for working dads concerned spending could be spiralling ahead of a difficult Christmas
Christmas will certainly be different this year. Social distancing measures in response to the pandemic have led to many festive celebrations being cancelled, or moved online, while some families must prepare for Christmas apart.
Amidst all these changes, one element of Christmas has remained constant; buying presents for loved ones. Despite the challenges Covid-19 has presented for many UK households, spending on Christmas presents is unlikely to change dramatically.
NerdWallet commissioned a survey of over 1,750 UK adults who celebrate Christmas. If found that spending on Christmas presents would only decrease by 5% this year; falling from £299 in 2019 to £285 in 2020. With many working dads the main earner in their household finding the cash for Christmas inevitably falls on their shoulders often.
While it’s positive to see that families are embracing the generosity of the festive period, it is important not to overspend. This could cause financial issues later down the line. Luckily, steps can be taken to help parents manage their finances over the festive period.
First and foremost, Christmas shoppers should set a budget. Obvious advice, perhaps, but it is surprising how many families overlook the importance of this. According to NerdWallet’s aforementioned research, 45% of adults do not have a budget for their spending over the festive period; this puts adults at risk of dramatically overspending.
So, it is advisable for parents and guardians to sit down and calculate how much they can afford to spend. This will involve factoring in all festive expenditures, such as decorations, food and travel, in addition to the usual monthly bills. From there, it will be possible to understand exactly how much they are able to spend on Christmas presents.
Conveniently, there are various budgeting apps available to make the process easier and help people stay on track with their spending.
A fifth (19%) of UK adults plan to take on more debt to pay for Christmas presents this year. Taking on extra debt, such as credit cards and small loans can be tempting for households who feel their finances are stretched too far. That said, adding to your debt to alleviate struggling finances is unwise. So, it is important for parents to take a look at existing debt, consider how much it costs and if there are more suitable products on the market to reposition the debt, could be a better first step to consider.
The key is to manage debt responsibly and not take on more than is necessary. For example, those planning to spend more on credit cards should make a note of exactly how much is being spent, to ensure debt doesn’t spiral.
Alternatively, mothers and fathers looking to take out a loan should find time to research their various options. Comparison websites are a good starting point for this, as they search the market and present various options in a clear, jargon-free table; so, all users have to do is choose an option which best suits their needs.
Although, those who are unsure of how much debt to take on should consult a financial adviser. Advisers will be able to help adults understand exactly how much debt they can afford, as well as develop a manageable repayment plan.
It’s impossible to ignore the plethora of discounts available to shoppers throughout the festive season. According to NerdWallet’s survey, almost a third (31%) of gift-givers were planning on making the most of the recent Black Friday or Cyber Monday discounts.
However, just because these savings events have come and gone, this does not mean that there are no more discounts to be found. On the contrary, many retailers have extended their festive sales this year. So, while it may require a bit of research, there are plenty of attractive offers available. Shoppers can hunt around for their desired gifts without needing to overspend.
Throughout 2020, many families have had more free time on their hands, which has allowed them to explore their creativity. So, for those on tighter budgets, it could be beneficial to put their new skills to the test and make presents for friends and family.
Whether this involves baking, knitting or painting, making gifts from scratch is a fun and cost-effective festive activity, which the children can also enjoy. What’s more, this personalised approach to gift-giving will likely mean more to the recipient than many store-bought presents.
Some loved ones can be particularly difficult to buy gifts for. In many cases, this leads to money being wasted, as people spend money on presents that are not wanted and are often thrown away or left to gather dust.
There is a simple solution to this issue; ask friends and family what they want for Christmas. Being direct will ensure that both parties are happy; the recipient will not feel guilty about receiving a gift they do not want, while the gift-giver can enjoy the stress-free process of buying a present without worrying about wasting their money.
It’s wonderful that the festive spirit of the British public has withstood the challenges of 2020. However, it is important not to let seasonal spending spiral. So, by developing a realistic budget and spending responsibly, families and friends will be able to enjoy celebrating Christmas without nagging fears about the state of their finances.