It’s the most wonderful time of the year, so invest in yourself and your family

7 December 2018

Lo and behold, Christmas is upon us once again.

For millennials, that often means booking a train and heading out to your baby-boomer parents’ homes for time off spent with family and old friends.

The run-up to Christmas is a choppy one for personal finances. Our spending commitments seem to ratchet up, be it drinks with colleagues, drinks with friends, five-a-side-football drinks, hot-yoga drinks; we all get together to celebrate and toast another year gone by.

Then there are the gifts. I have the (mixed) fortune of only really having one person to buy for, my dad. He’s not terribly fussy; a good history book and maybe some aftershave tend to see him clear.

But some of you will have much bigger families. This can be bad for your finances, especially if everyone expects a gift.

If you’re feeling the pinch ahead of 25 December, talk to your family about it. Maybe think about doing a secret Santa where you all pick a name out of a hat and buy for just that person instead of buying gifts for everyone. Don’t be sucked in by the commercialised aspects of Christmas because the holiday is ultimately about spending time, not money, with your loved ones.

And if you do have to spend, do so smartly. Credit card debt that goes unpaid and sits with high interest ticking over is one of the most corrosive things to your financial wellbeing. It will degrade your finances, and your mental wellness.

If you’re able to, pay it off in full as soon as you can. If not, look for a 0% purchase card so you’re not paying interest on what you buy. Or if you’ve already racked up spending, consider a 0% balance transfer card.

And when you’re finally home, and your dad is snoozing on the sofa with a belly full of turkey and stuffing, have a think about next year and what your ambitions are for your money.

Do you want to take a nice holiday? Do you want to stash more money away for a house deposit? Maybe you want to save up and buy a road bike for that commute to work, or even just save up some cash as a rainy-day fund.

If I have learnt nothing else in the past two years of scrimping and saving and managing my money living in London, one of the most expensive cities in the world, it is that having a plan, sticking to it, and not ignoring your money is utterly essential to your wellbeing.

The single most important thing I did to make the best of my finances was to start a simple spreadsheet in Excel, charting my incomings and outgoings. I also listed the day of the month that all my payments left my account, and how much, to avoid any nasty surprises.

The result has been pretty extraordinary. I have gone from a position of leaning on credit cards to cope to saving £400 a month. Just by writing everything down clearly and having a plan of action.

I stick more or less to my 50/20/30 rule (something I’ve mentioned in this column before), whereby 50% of my salary goes on fixed costs, 20% on debt or savings, and 30% on day-to-day costs. It is a pretty effective method.

This is just one idea that might not necessarily work for you. But the point is, like Mr Bueller says, if you don’t stop and look around once in a while, life (and your money) might pass you by.

This Christmas, I urge you to do two things. First, take advantage of the time you have with your family and spend it well. I lost my mum in 2014 and something I will always regret is that my younger self didn’t invest more in time with her.

Second, with a moment to breathe away from the pulse of the big city scramble, stop to invest some time thinking about your money. The results can be life-changing.