Take pressure out of Christmas with these budgeting tips

MOTHER-OF-SEVEN Kate Byrne has been saving for Christmas since last June — her boys are hoping to get the new X-Box One this year. Byrne, whose seven sons range in age from seven to 23 years, says this year they’ve all agreed to share a ‘family present’ rather than opting for individual gifts.

The state-of-the-art entertainment system, on which she intends to spend in the region of €600, was something everybody wanted, and the decision was made early in the year. “I started budgeting for the X-Box from the end of June — that was important because this is a big bill,” says Byrne, a psychologist who specialises in children and adolescents. “It’s important to plan ahead and stick to your budget.”

Going outside the budget, she believes, will affect the family in terms of their emotional and psychological, as well as their physical, well-being.

“Christmas can be an incredibly stressful time for families with children, because the stuff coming into the shops is incredible — they had Christmas gift wrap on sale in September.

“The pressure starts quite early. Gadgets and toys get more expensive, but as parents we want to give our kids their hearts’ desire.”

The statistics lend weight to what she’s saying – Irish people are notoriously open-handed at Christmas. Festive spending per head reached €1,300 per household during the last days of the boom, and while the downturn forced us to pull in our horns — last year our Christmas outlay dropped to an estimated €960 per household — we’re still among Europe’s top seasonal spenders.

By contrast, the thrifty Dutch spend just €287 per household, while the big Christmas spenders Luxembourg are still below us at €815 per household, and the Swiss at €816 per household.

Byrne recalls how at one stage she and her family lived in a neighbourhood where all the local children were expected to bring their favourite present for a special blessing at Christmas morning Mass in the local church:

“That really piled on the pressure — all the school friends used to be there.!”

This year the Byrnes are adopting a special Christmas theme: ‘Let’s Look at making Someone Else’s Christmas Better.’

In light of this, each child will make a donation to their charity of choice.

“One of the boys wants to give a goat, for example. I put money aside out of their pocket money and this is saved up and donated to the charity.”

The family is also holding a Kris Kringle to cut down on the amount of presents to be bought:

“Everyone draws a sibling’s name and they buy that sibling a €10 present,” Byrne explains.

Although some may feel June is a bit early to start saving for Christmas, according to the Money Advice and Budgeting Service, households should actually start in January.

But if you’re not that organised, October is still a much better month than December to start laying Christmas cash aside, says spokesman Michael Culloty.

“It’s important to think now than reacting in December and panic buying. There are a lot of people who cannot borrow except from a money lender because their credit rating is in shreds.”

So sit down now and make out a budget, he advises. “See what you have to spend money on between now and Christmas, on a weekly and daily basis. Work out what you’re spending and what you can save and decide on a certain sum to be put aside every week for Christmas.”

Decide what kind of Christmas you’re going to have and how you’ll celebrate it so that you won’t get sucked into expenditure.”

Ask the children to write to Santa early this year, he says – that way you’ll know what’s involved, and prepare accordingly.

“If you look at what you need to spend and you realise you don’t have it, talk to MABS before borrowing,” he says. “If you cannot afford to save, you cannot afford to borrow.”

Former banker and Money Doctor John Lowe has just launched his latest budgeting guidelines, and believes Christmas can be planned for. Do a breakdown, he says and budget accordingly. Lowe suggests four categories; first presents, secondly cards, decorations and Christmas tree; thirdly, outlay on food and drink and, lastly, socialising; you need to budget, he says, for the cost of seasonal trips to the cinema or the pantomime.

There are different ways to do this, he says. “I recommend that people have a Rainy Day Fund which should be three to six months of their net annual income,” he says, adding that depositing between €100 and €1,000 per month in a regular saver account can see your through a variety of expenditures from a sudden loss of income to an emergency — and it can also be used to fund Christmas.

However, if you must borrow for Christmas, consider your Credit Union, which is, at the moment “the cheapest and best route” available. But remember, you must only take out a 12-month loan.

Avoid an overdraft if possible:

“Overdraft rates are extremely expensive. If you get one you’ll pay 13% or 14% interest. If you exceed your overdraft you will be talking about doubling the interest, plus other charges.”

The credit card is another popular option when you’re temporarily strapped for cash — but make sure you pay everything off at the end of the month, he warns.

Lowe, whose Money Doctor app can be downloaded for free, says parents should make a point of encouraging children to save for Christmas. “Don’t encourage your child to ask you for money to buy you a present.”

Let them earn money by doing extra chores on top of doing the normal unpaid ordinary jobs they do around the house, he says.

People come under psychological pressure at Christmas, says Culloty.

“They don’t want their kids to be seen doing without and they may overcompensate.

“It can be quite difficult for people to accept that they need to cut back at Christmas, particularly for the man of the house.”

It’s important to sit down and talk about it at family level rather than allow yourself to be psychologically pushed into debt.

“If you can do it, it would be a good idea to set up a savings account for Christmas 2014 now,” he says.

In the meantime, think outside the box, he says — with bartering-style presents, such as five hours of babysitting or a promise to help paint a room.

“Get your thought processes going so that when January comes you won’t end up with a burden that’ll last into the first six months of 2014.”