Family wealth – Christmas can be an expensive time of year, catching people unawares as the new year dawns with the likelihood of large credit card debts. A great way of saving money is to spend only what is available with respect to family wealth. This will prevent the prospect of bank charges, late payments and unnecessary borrowing fees from shrinking the family wealth.
Using 0% balance transfer credit cards, such as Virgin credit card or platinum credit cards from NatWest, HSBC or similar can save money so long as the account holder avoids putting purchases on them. When the term expires, borrowing rates resume and the customer could accrue unexpected costs. Unless the customer is vigilant in this respect, it might be wise to avoid credit cards altogether.
Family Financial Planning for Christmas Holiday Savings
Depositing money into a high interest savings account is a great way of making savings in terms of family financial planning. It is worth noting first that it is better to use spare money to pay off any existing debts rather than to use it to save, as the debt will be more costly.
A cash ISA offers competitive interest rates tax free. If this is full, special regular savings accounts offer good saving rates so long as the account holder regularly deposits money into it. A standing order is the best way.
Working out how much can be deposited into the savings account requires working out the family wealth income first. This can be done by following these simple steps:
How to Make Money for Christmas by Family Wealth Budgeting
Ensure that all benefits are claimed. Directgov has an online benefits adviser for family financial planning, which calculates via questionnaire whether someone is entitled to certain benefits and tax credits
Ensure that money can be saved in other avenues such as house insurance, mortgage protection or by using energy saving appliances to maintain good family wealth.
With these taken into account, working out a monthly personalized budget is the next step. This entails:
- Family income: Adding wages after tax with benefits and interest from savings over the year.
- Family expenditure: Adding all the annual household bills and expenses over the year. (Leaving no stone unturned is important)
- Monthly disposable income: Deducting the expenditure from the income and dividing into twelve.
- Look out for any large one-off bills such as the MOT or household repairs that may need catering for. Making further provisions for (realistic) non-essentials such as nights out will ensure the final figure can be adhered to.
Household Budgeting for Christmas
With the amount worked out, the figure may be deposited into a high-interest savings account via a standing order, where it may earn healthy interest throughout the year. It is a good idea to keep checking whether the savings account retains its competitive interest rates and to switch savers if this seems to wane after the first year.
Using a Debt Programme and Budgeting Finances
Avoiding credit card debt, making savings on household bills, claiming all benefits and making deposits into a savings account will have a surprising effect upon the Christmas budget. Spending only what is available as opposed to borrowing is a great way of saving money and obtaining peace of mind that Christmas debt need not be a worry once Christmas is over.
For those in need of debt assistance, however, the National Debt Line (NDL) is a charity-run service that also helps find solutions and work out Debt Management Plans. For further advice, the Citizen’s Advice Bureau or Payplan offers a free service that provides useful contacts and debt advice.
How to Manage Debt with Family Financial Planning
It’s important to ensure that the debtor is capable of managing his/her debt. If truly needed, then knowing about debts, loans and credit cards is the first step.
Tips to Work Out before Getting a Loan
- Ensure affordable amount. Make sure a rise in interest rate is factored out
- Limit borrowing and stick to it
- Saving as much to ensure bigger deposit and to reduce borrowings
Choosing a Loan
A loan with the lowest interest rate should be mainly considered. This will make a lot of difference in the payment, in particular, with long-term loans.
Term of Debt
Debts have many types, that is, different fees, interest rates and other terms and condition including schedule of payment. Paying off the loan over a shorter period can save a lot of monies.
Interest rates can be fixed and variable. With a fixed rated, payments can be exactly calculated over time. Again, terms and conditions come into play. Fees and charges should be compared as they can vary between loans.
Homework should be done. Aside from seeking a financial adviser, magazines and newspapers can be checked and comparisons can also be made. Credit Cards are another form of debt which has been convenient to use but can drain the cardholder from high interest charges.
Tips to Manage and Control Credit Card
- Getting a credit card must be avoided if repayments can’t be handled
- Shop around for the best suitable credit card
- Compare the fee charges, interest rates and the repayments interest-free period
- Balance must be paid before the interest-free period ends
- Increasing credit limit must be avoided if it’s not needed or if payment can’t be handled
The value of assets, on one hand, and loans and credit cards owing, on the other, should be accounted for and written down for proper tracking. This will provide indication whether debt can be handled or not. A struggle in repayments is a sure sign that debt should be adjusted and reduced.
To reduce debt, there must be a plan which debt to pay first. Usually it’s a debt with the higher interest rate. It should also be noted that some loans are tax deductible, usually those that have lower priority to pay off.
Tips to Help Manage Debt
- Avoid using credit card as much as possible
- Cancel all credit cards and retain one with the lowest rate
- Make extra payment as much as possible
- Keep track of debt status by doing a debt check
- Consider refinancing a home loan, if the deal is better
- Align budget with debt management
- Consolidate several loans or credit cards to save on interest rates and other fees.
- Talk to the bank or financial institution when there’s hardship in paying off debt.
- Make use of available financial services offerings