9th December 2024
The festive season is a time for giving, but practicing financial mindfulness can help secure your financial well-being for the future.
As the festive season approaches, it’s natural to feel the financial pressure of gift-giving, holiday celebrations, and other seasonal expenses. However, with nearly 14 million people in the UK having less than £100 in savings to handle unexpected expenses, it’s important to consider how you can build a financial safety net – even during this busy time of year.
We all love Christmas, and it's easy to get caught up in the festivities. According to the Bank of England, the typical UK household spends on average 29% more during December than other months. It's the time of year for giving, but it's important to remember not to go overboard and spend more than you can afford. By setting a realistic budget, avoiding impulse purchases, and prioritising meaningful over material gestures, you can enjoy the festive period without compromising your financial stability.
For many, the Christmas period represents a time of giving, but it’s also an ideal time to give yourself the gift of financial security. An emergency fund is a financial safety net designed to cover unexpected expenses, such as car repairs or sudden job loss, without resorting to debt. It's generally recommended to save enough to cover 3–6 months' worth of essential living expenses, but if you're starting your savings journey, even one month's expenses will give you greater peace of mind. To ensure quick access, it's best to keep your emergency fund in an easy-access account, allowing you to withdraw funds without penalties when needed while still earning some interest.
Building a habit of saving can boost your overall well-being. Studies show that having savings can significantly reduce financial anxiety and increase life satisfaction. Those who set aside money regularly tend to feel more in control of their finances, enabling them to face unexpected expenses with less stress and more confidence. And it doesn’t matter how small the amount saved each month. In fact, it is those on lower incomes who are reaping the biggest well-being benefits of regularly putting a little aside.
If you're looking to get into the savings habit, it's important you choose the right savings account for you. For example, Regular Savings accounts are designed to help you grow your savings with consistent contributions. This type of account is for those looking to develop a disciplined savings habit and work towards their financial goals with regular deposits, whilst typically receiving a higher rate of interest.
With December being the most expensive month of the year for many, it makes sense to save up as much as you can beforehand. The earlier you start saving, the less you need to put aside each month. Even a small amount over a few months can make a big difference.
By making small changes this Christmas, you can prepare for the year ahead with more confidence. Remember, saving a little today could make a world of difference tomorrow – especially when you least expect it.