Christmas is a time when loans are very popular. Most people want Christmas to be perfect, they want to buy the ideal gifts, they want to complete their children’s Christmas list, and many will go to the ends of the earth to achieve this.

Loan companies are clever, they know how much pressure you’re under to make that pay check last longer at this time of year, and they ramp up their advertising to catch you while you browse the web looking for gifts.

There’s also a little psychology behind this, Martina Mercer, a consumer behaviour specialist who helps brand understand their customer’s psychology explains, “It’s the season of goodwill, and the season of giving. Consumers are more likely to take out a loan if they believe they are doing a good deed for someone else in the process. It’s an altruistic act, as those taking out the loan will even be aware of the financial hardship that will follow but will dismiss this as they are doing a good deed for someone else. In short, at Christmas, many people put their own happiness last, and worry about the consequences in January. It’s no surprise that January is the most depressing month of the year as the loans, the credit card bills and the overspending catches up with the generous gifters from the months preceding.”

In short, even though consumers know they will struggle if they take out a loan, they feel this is a small price to pay for someone else’s happiness. In reality, a loan could have a negative effect on someone’s life for months, or even years, as many spend the whole year trying to catch up.

What’s the Solution?

MoneyNerd is here to help and to find solutions to this common problem. Your Christmas, and New Year should be positive and MoneyNerd wants to ensure you don’t fall into the loan trap, no matter how unselfish your intentions.

Here are a few ways you can give the best gifts at Christmas, without overspending.

Start Early

If you’ve already overspent this year and taken out the loan, start again in January. Sign up to every club card, join cashback sites and do the penny challenge. This forward planning will make sure you have lots of money and points to spend for next year’s Christmas. It may seem a long way off, but it will come around soon enough.

The Penny Challenge

The penny challenge can help you save up to £700 in a year. It’s easy. On day 1 you save 1p, day 2 – 2p and so on, until, on day 365 you save £3.65. You can print off a savings chart from the web and cross off the amounts as you add them, so you can mix it up if you have a little more spare change one week.

Give the Gift of Time

It may sound like a cliché, but most children and adults that love you don’t really care about expensive presents. Ok, your children care about presents, but depending on their age, they’re usually happy to open lots of little ones rather than a huge expensive one. In a recent study, when children were asked to recall their memories of Christmas, very few mentioned the presents they received. Most talked about the traditions, hanging the stocking, hot chocolate near the fire, spending time as a family.

Try giving the gift of your time. You could make a box of favours for each adult. Favours ranging from – waiting in for a delivery to making a cup of tea. This will be a gift that keeps on giving.

For children you could create a box of experiences for them to spend throughout the year. Such as a day rock pooling, a trip to the park, a friend for tea or extended bedtime story time. They’ll love spending their tokens with you and you can add other experiences for older children that may cost money, as you may have more to spare throughout the following year.

In short, use your imagination, and think about what your friends and family would really want for Christmas. They wouldn’t want you to suffer financially, they wouldn’t want to see you sad and upset, they would want to spend time with you and that’s really all that matters in the grand scheme of life!

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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