Understanding your energy usage
After a tough year financially – with Covid and lockdowns having wreaked havoc on our finances in 2020 – affording Christmas was a worry for many people.
Having made it through the festive period, lots of families will now be breathing a sigh of relief – and focusing their efforts on surviving January.
But while December 25, 2021 might be the very last thing on your mind, the current state of our finances should serve as a reminder of the value of being prepared.
At the start of the new year, clearing any debts you ran up in December should be a priority. But once you’ve done this, next comes squirreling money aside for the future.
If you start saving now – and put away a little and often throughout the year – you’ll have a decent nest egg saved up in time for next December. This should make the 2021 festive period less of a financial stretch.
If you’re wondering how best to start slotting money away, one of the best approaches is to commit to saving a small, regular amount each month.
Say, for example, you save £50 on the 1st of each month, you’ll have £600 to spend on next year’s festivities. Increase this to £100, and you’ll have £1,200.
If you’re trying to develop good savings habits, it’s a good idea to set up a direct debit to go into a savings account for the day after payday. That way, you will barely notice the money leaving your account.
While you may be tempted by a regular saver account – as these involve you putting in money each month, and can often offer more competitive rates than other savings accounts – most of these require you to make a minimum of 12 payments.
This means you’d have needed to start saving last November to make these work for Christmas 2021. The exception is if you can find a regular saver which permits one or more penalty-free withdrawals.
Alternatively, you may want to consider an easy-access account which offers complete flexibility on withdrawals – though you’ll need to be disciplined about not dipping into funds until next Christmas.
Before signing up to any savings account shop around to find the best rates available, and be sure to read the Ts and Cs.
Now could be a good time to download an app, such as Plum, Chip, Cleo or Tandem, all of which use clever algorithms to analyse your spending habits and work out how much you can afford to save. They then automatically sweep money from your bank account into a separate savings pot – usually a few times a month.
Each has clever features to encourage you to save. Tandem, for example, has a ‘round-up’ feature where your purchases are rounded to the nearest pound and moved to saving.
With Cleo, you can set up a ‘swear jar’ where money is moved into a savings pot every time you ‘commit a crime’ and spend on a purchase you were trying to avoid.
These apps can be a great way to get into the savings habit and build a decent fund for Christmas 2021.
Some banks now offer a ‘save the change’ feature. With this, whenever you buy an item with your debit card, that purchase is rounded to the nearest pound, and the difference is moved to your nominated savings account. For example, say you buy a coffee costing £2.85, it will be rounded up to £3, and 15p will be transferred into savings.
Check out the ‘save the change’ feature from Lloyds, Halifax and Bank of Scotland, as well as Nationwide’s Impulse Saver.
There are also a host of apps, such as Monzo and Starling, which automatically round up your purchases and put the spare change in a separate pot.
If the idea of saving a set amount each week or month doesn’t pique your interest, you could set yourself a challenge instead, and have a bit more fun with your saving.
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