James Pickles: Keep on top of festive finances

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Christmas is a time for giving but you don’t want to wake up with a financial hangover in the New Year.

The tempting offers make it all too easy to over-indulge and run up debts you can’t afford, but as it’s Financial Planning Week, the following tips should help you avoid the post Christmas blues:

• Plan early – be realistic and budget accordingly. Work out how much to spend on presents, cards, food, entertainment transport etc – and stick to it. Manage people’s expectations as to what you can afford as a gift.

• Don’t forget everyday bills – remember that rent/mortgage and utility bills still have to paid and non-payment can have severe consequences. Even though it’s Christmas, get your priorities right.

• Don’t bank on an overdraft – if you need more money, don’t just run up an overdraft without speaking to your bank. Unauthorised overdrafts can carry higher charges than some “payday” lenders. This type of lender should be avoided at all costs, with annual interest rates running into thousands of per cent. If you need to use credit cards, try and pay these off in full to avoid cumulative interest charges.

• Keep things simple – if you can afford to pay by cash, cheque or debit card, avoid taking out extended credit agreements or store cards.

• Shop around – try different retailers and the internet to get the best prices and avoid unnecessary warranties.

• Buy safe to be safe – however tempting, never buy goods from unauthorised traders. Your bargain buy could be a false economy.

• Read the small print – check for any hidden extras in credit arrangements. Interest-free arrangements look less attractive if you fail to make a payment and get stung with high charges.

• Do your own credit checks – compare credit card deals. Some cards may have high interest rates but still offer better interest-free periods.

• Get organised – there’s a lot to remember, so don’t forget to make any credit payments on time, even if it’s only the minimum payments this will avoid additional charges.

• Start planning and saving for next Christmas – once it’s all over, review how well you did. Learn from your mistakes and think if you could afford monthly savings to soften the blow next year.

James Pickles in a financial planner at Carbon Financial Partners Ltd, an accredited financial planning firm with offices in Edinburgh, Aberdeen, Perth, and Glasgow