What Christmas will really cost you

Our debt hangover will last well into next summer. If we’re lucky

Don’t let spending cripple you for the rest of the year (Getty)

More than £1.6bn on Christmas cards, £325 per person on chocolate, even £20 on each work colleague. (Yep, even the ones that haven’t been elevated to actual friends.)

The stats flying around detailing the astonishing amounts of money we’ll part with by the end of the festive period is dizzying. And increasingly worrying.

Historically, one in five of us is still paying for last Christmas as this year rolls around. And this season, all the indicators point to a greater spend than ever despite the fact that households now have almost £1,000 of debt more this December than they were grappling with this time in 2018, according to the latest figures from the Money Charity.

A Christmas of mindless over-consuming flies in the face of our emerging environmental awareness. It certainly isn’t financially sustainable either. But the moment the subject of cash at Christmas comes up, the “bah humbug” shutters come down.

Christmas versus cash

Christmas is all about indulgence, right? Yes, as long as it doesn’t cripple you for the rest of the year. You wouldn’t have that extra helping of pud if you knew it would be the mouthful that tipped you into type 2 diabetes.

So why let the purchase of another scented candle help tip you over into Christmas debt that will haunt the average adult until the middle of next August (the time when debt charity StepChange expects payments to finally be settled)?

Spending more doesn’t translate into a better festive period. Retailers just invest a lot of time, effort and money into making us think it does.

But don’t take my word for it. Take Europe’s. Britons spend 39 per cent more than the typical European, including those in nations held up as the embodiment of the ideal Christmas across the world, research from Deloitte reveals.

How much?!

The study suggests we’ll each spend £299 on gifts this year, £143 on food and drink, £63 on socialising and £62 on travel – adding up to £567 per person.

But those figures are at the conservative end of the estimates. Nationwide Building Society, for example, predicts an average spend of £727 – around two weeks’ worth of the average take-home pay.

American Express reckons it’s twice that amount, at £1,522 each, including almost £500 on “Christmas getaways”, perhaps in a bid to escape the whole thing.

StepChange estimates a third of the Britons celebrating Christmas this year will borrow to pay for it.

Silent costs

This year, the spending season comes at a time when financial product providers are being heavily scrutinised for the charges they impose on those in debt. And there are a lot of us.

Britons owe a total of £3bn through overdrafts – borrowing that has hit headlines for extortionate fees and interest rates, the latest data from the Office for National Statistics (ONS) shows.

Meanwhile, analysing the financial behaviour of 8 million users over the 2018 festive period, ClearScore predicts that the average consumer could spend £3,600 on credit cards this year.

If they only pay the minimum payments each month, the cost of the debt will add a further £620 to their Christmas bill with the average interest rate, rising to an alarming £1,403 if they had the highest interest rate card in the market.

If you do end up getting into debt this Christmas, a balance transfer card with a 3 per cent balance transfer fee and a 0 per cent introductory offer for 12 months could save you £142 on an existing balance of £1,000 if you pay the minimum required each month. With a balance of £4,000, you could stand to save over £560.

Switching to a purchase card with a 12-month introductory rate could save you a maximum of £344 on a £2,000 balance if you pay off the minimum balance each month.

Mindful money

One of the easiest ways not to overspend this year is to simply be aware of it. And that means employing the same strategies that we use for the rest of the year. Work out a budget, starting with what you can afford to spend on the major Christmas costs, not forgetting the typical monthly bills such as utilities, rent or mortgage payments.

It’s always worth seriously looking at where you can cut back on quantities across categories. Will your three-year-old niece really notice if you only send her one dressing up outfit rather than two? Will your guests walk out if there are only two pigs-in-blankets on their plates? What about buying second hand, making gifts or drafting in a capable friend for a skills swap if you’re not too handy?

Making a detailed shopping list across the whole spend, including travel, socialising, gifts, food and drink, work backwards to identify specific products or services that fit your budget rather than trying to shoehorn the ideal luxury item into your available spend.

Finally, experts suggest simply paying attention could have one of the greatest effects on runaway spending. Last year, an eye-opening survey by Ocean Finance of consumers leaving high street shops suggested that only 16 per cent of us could recall how much we had spent moments earlier.

Tot up spending as you go. And when the cash stops, stop.