[STANDFIRST] Start saving and stretching your cash now to avoid a New Year financial hangover. Vicky Shaw seeks some expert advice.

Christmas may still seem a long way away (unless you're one of those people who's already counting down the days!), but it pays to start planning now.

Last year, families spent around £820 on Christmas typically, previous research from VoucherCodes.co.uk and the Centre of Retail Research suggests. Many households will have put their Christmas on credit - but with some planning ahead, it may be possible to build a pot of cash and make savings here and there which will stop you forking out more than you need to. If you're visiting loved ones this Christmas for example, booking travel tickets ahead could help to ease the costs.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, says: "Around one in three people end up putting Christmas on credit, which can prove expensive. Given that you have a bit of time until Christmas, you can use the opportunity to put some cash aside, and use a few cunning tricks to boost your Christmas savings, so you can celebrate this year without breaking the bank."

Here are Coles' 10 top tips for building up a money pot for Christmas...

1. Save money each month

Set up a standing order to put money into a savings account as soon as you are paid each month, so you're not tempted to spend your Christmas savings.

2. Consider microsavings

There are a number of approaches you could take. Some banks allow you to round up each spend to the nearest pound and save the rest, while some apps regularly take small sums of cash from your current account and put them into savings for you. The idea is that they're so small, you don't miss the money, but large enough to add up.

3. Switch current accounts

Some current accounts offer interest rates of up to 5%, while others will give you a bonus for signing up - to kick-start your Christmas savings. M&S Bank, for example, will offer a £125 M&S voucher for switching, and another £60 voucher after you've stayed for six months. It's not a good idea to switch for a bonus alone, but if the account itself suits you, it's a nice extra for Christmas.

4. Have a pre-Christmas clear out

Have a look through the cupboards for old presents and things you haven't used since last Christmas. If you sell them on auction sites or specialist sales sites, you could raise a handy lump sum.

5. Try trading down brands

If you buy branded goods, try the own-brands. If you buy own-brands, try the basic range. Alternatively, give a discount supermarket a try. You're unlikely to like everything you try, but you may find everyday savings you can take advantage of for life - and in the interim you can cut your grocery bill by 10% or more and put the savings aside for Christmas.

6. Cut out the small luxuries for a couple of months

This doesn't have to involve a major sacrifice, but if you were to drop a family takeaway once a week, a daily coffee, and a drink after work on Friday, you could put aside an extra £200 a month, which would boost your Christmas savings nicely.

7. Start with the budget - not the wish list

Once you've established your savings strategies, you'll have an idea of what you can afford to spend: This is where you start - not the big list of things you ideally want to buy. If you don't have enough cash to cover the wish list, you can then decide either to cut back on each gift, or chat to people you know well enough and agree not to buy for one another this year. Who knows, they may be just as relieved by the idea as you are.

8. Cashback websites

Sign up to one or two cashback websites, and whenever you shop for anything between now and Christmas, you'll get some cashback. The amount of cash will vary, but can be up to 15%. Even if you were to get 1% cashback on £500 of spending, it's still a £5 voucher, which will come in handy.

9. Cashback credit card

This offers similar benefits, but comes with a major caveat: If there's any chance you won't pay this off in full and on time every month, then give it a wide berth - or you'll quickly spend far more in interest than you'll ever make in cashback.

10. See people in the New Year

Not only will this give you another pay day to cover the cost of their present, but it gives you the option of re-gifting if your budget is really stretched.


The choice of ways to pay may be increasing, but less than one in 10 people would be ready to go without cash altogether, a survey by Post Office has found. Some 91% say they want to retain the choice offered by different payments, rather than moving to a cashless society in the immediate future.

Why we still like cash

For a quarter (25%) of people, it's apparently important to have a choice of payment methods. Many say paying by cash helps them manage their money, with 23% saying they feel more in control of their outgoings by making physical payments rather than using card or online methods.

Nearly a quarter (23%) also say they simply feel more comfortable using cash, and this applies to younger (22% of 16-24-year-olds) and older age-groups (30% of over-55s). Fraud worries also play a part, with 14% saying they feel more protected from the risks surrounding fraud.

However, it's worth bearing mind that some non-cash payment methods do offer people certain extra protections against losing money: For example credit card payments can be protected under Section 75 of the Consumer Credit Act. Paying by methods such as PayPal can also give you added protections if something later goes wrong.

What we use cash for

On average, we carry £26 in cash in our wallets, the Post Office research found. Paying to park the car, popping out to buy food, nights out, pocket money, going to local events and paying for a service such as window cleaner are all common situations where we're still likely to reach for notes and coins.

Martin Kearsley, director of banking services at Post Office, says: "Despite the increased use and popularity of digital payments, our research highlights that the debate on the future of cash should not be about one form of payment replacing the other, but instead looking at how consumers balance their use of different methods alongside one another.

"People of all ages, and in communities across the UK, continue to rely upon the flexibility cash offers alongside other form of payments. With 95% using cash at various times to fund their spending on everyday essentials, it is vital that people have continued access to cash and choice in how and when they use it."


Financial fact: Annual growth in households' borrowing from sources such as credit cards, personal loans and overdrafts has slowed to a three-year low, Bank of England figures show. Consumer credit increased by 8.1% annually in August. It was the lowest annual growth seen since an 8% increase in August 2015.


Millennials are being encouraged to set aside a 'life admin hour' to help them take control of their finances. This could be spent using online budget planners, setting savings goals and getting on top of debts. F&C Investment Trust made the suggestion, coinciding with Financial Planning Week (October 3-10). Ross Duncton from BMO Global Asset Management, says: "Even an hour can make a difference."


Households in flood-prone areas could see their insurance costs reduced from next year, according to a scheme which helps to make affordable cover more widely available. The Flood Re scheme, launched in 2016, said it will cut the charges it makes to insurers - which in turn could make cover cheaper for households.

The scheme does not deal directly with households but sits in the background for insurers to make use of. Flood Re will reduce the reinsurance premiums it charges to insurers from January 1, 2019.


The battle to attract current account customers has heated up, with banks launching new 'limited-time' offers.

NatWest is offering £125 to new and existing customers switching their main bank account. The offer runs until December 3. And Barclays has said customers who switch using the current account switch service before November 14 will get double Barclays blue rewards for 12 months, receiving up to £30 a month or £360 over the year.