Money mensch: How to have yourselves a prudent Chanucah
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For those who have still not bought their Chanucah presents, there’s still enough time to get preparations under way.
Act now, and there are substantial savings to be had. Leave it any later and you’ll be too late to get the best savings.
To help, here are my five top tips:
What can you afford?
1. It’s about what you can afford, not what you want. Each Chanucah, too many people are driven by their wish-list.
They sit down and work out everything they want as a present; from the plasma TVs to Nintendo Wiis.
Only afterwards do they sit down and think about how they are going to pay for it. Yet that’s completely the wrong way to do it.
Your starting point should be how much money you can afford to spend this Chanucah. Then the real question is: “What’s the best Chanucah we can have on that amount of money?” If you have nothing or very little to spend, don’t think, “it’s Chanucah, we’ve got to spend it.” This is a year to have financial discipline. Recession is coming.
Draw up a budget and plan what you are going to spend. It may not seem as romantic as spending willy nilly, but at least you won’t have a financial hangover in the New Year.
Use Clubcard deals
2. If you have Tesco Clubcard vouchers, use them on the special Clubcard Deals brochure which you can find online or in-store, as opposed to food.
Something that would get you £5 off your food bill will give you £20 towards RAC membership, magazine subscriptions, gifts or days out.
Instead of getting a few pounds off food for your Christmas dinner, find things that you are looking to give as presents and you’ll get better value.
Get a Pre-NUPP
3. Get a Pre-NUPP. I’m proud this year to be launching the pre-NUPP campaign. NUPP stands for No Unnecessary Present Pact. It’s a pre-NUPP because you need to arrange it with friends and family before Chanucah. How many times have you been given a present that you know you are never going to use? You smile politely, say thank you and then throw it in the drawer.
Well, you are not the only one. It happens to everyone. We spend millions of pounds on things that are never going to be used by anyone.
By giving presents we often create an obligation for people to give presents back to us, and that may be something they can’t afford to do.
So, this year, why not sign a pre-NUPP with family and friends? Agree not to exchange presents.
If that’s a step too far for you, go NUPP-lite and agree to spend no more than five or ten pounds on each other.
If you are worried how to broach the subject, I’ve launched a free email which you can get at www.moneysavingexpert.com/nupp
Use a five per cent cashback credit card
4. Get five per cent off your spending using a cashback credit card. These pay back a proportion of what you spend each time you use them.
Yet it’s only worth doing if you pay off the card in full every month — the best way is using direct debit — so that you never pay interest. Do that and it means you’ll be paid cash for nothing when you spend, effectively giving you a discount on all your spending.
Right now the current top payer, if you earn over £20,000, is the American Express Platinum card which gives you 5 per cent cashback for the first three months. Apply now and you should get it within a couple of weeks.
At this stage it’s touch and go whether you’ll get the card in time for Christmas; you might get it for the last few shopping days, and, if not, you’ll have it in time for the January sales.
If you can’t get the Amex card, other cashback cards are the Abbey Essentials card and the Smile Classic card.
The only problem with an Amex card is that it isn’t as widely accepted as a Visa or Mastercard.
Even so, all you have to do is to use your debit card instead.
5. Take advantage of supermarket bonuses. Supermarket saving stamp schemes are designed so that you can save up money all year and spend it at Chanucah.
In general I’m not in favour of them. One reason is that, unlike a bank, there’s no savings protection. In the unlikely event of a big supermarket going bust, you’d get nothing.
Plus, the interest you get depends on how much you have in your account in November or December, so why bother keeping your money with them for the rest of the year? Better to keep it in the bank where you’ll be earning interest all year, then buy stamps just before you spend them and grab the bonus.
This also means you haven’t the money in there for long, so the risk is minimised.
Asda’s bonus date has already gone but Tesco’s, Morrisons’ and Somerfield’s haven’t.
Morrisons will give you a three per cent boost on your stamps, while Somerfield and Tesco offer four and two per cent.
Why are they so generous? Well, if you buy the stamps, you are locked in to spending that money with them and for their administration purposes it’s much easier for them to add the boost on one day.
They hope people will save across the year, but there’s no need to; simply buy stamps and earn the bonus on the day you want to spend.
Finally, the biggest danger around this time of year is borrowing. If you are thinking, “how on earth am I going to pay for it?” I’d say, don’t buy it in the first place. You don’t need it.
If you’re careful and put it on a credit card in December that you repay IN FULL in January, you can effectively spread some of the cost into January too.
If you do this, make sure you’ve planned how much you are going to spend, and borrow as little as possible.
The last thing you want is still to be paying for this Chanucah next Chanucah.