thinkbanking highlights the importance of a budget for Christmas and beyond

Christmas can be a big expense: from the turkey and all the trimmings, decorations and social occasions, to presents for friends and family. However, budgeting bank account provider thinkbanking is urging people to consider the importance of a well-planned budget to make sure they start the New Year in good financial shape.

Research from MoneySupermarket.com recently found that, though 21% of people will use savings to cover the festive spend, and 38% will have enough disposable income to finance costs over the Christmas period, 11% plan to use their credit or store card. As a result of 'paying on plastic', however, many people could still be paying for Christmas much further down the line.

Despite the convenience credit can offer for many people, it's not the cheapest way to cover the cost. A credit card with an APR of about 18% and a £500 balance could take nearly 12 years to pay off in total, if you only make the minimum repayments of 2.5% every month.

Having said that, with so many of us feeling our finances squeezed by falling disposable incomes and rising living costs, some people feel that borrowing is the only option -which makes it important they budget for their monthly repayments along with all their other outgoings.

One way of making Christmas more affordable is by spreading the cost over the year - which takes planning and commitment, but could make a real difference to the overall cost of Christmas. You could begin preparing for Christmas 2012 by taking advantage of the January sales: at the start of a New Year, many shops offer discounts on cards, wrapping paper, decorations and other festive items. Why not buy your presents throughout the year? It could save you money and help you avoid the last-minute rush nearer the time.

However, one of the most practical ways of looking after your finances is to draw up a well-planned budget, so you can set aside some money every month and watch it grow over the year - you may be surprised at how much you could have saved by next December!

A spokesperson for thinkbanking commented: "It's important for consumers to think about how they'll cover the cost of big occasions like Christmas. With many budgets really feeling the pinch at the moment, plenty of people don't have savings they can depend on, but there are still steps they could take to fund the festive season without taking on debt.

"Although some people feel that they have no option but to borrow, drawing up - and sticking to - a successful, well thought-out budget could make all the difference, and help them avoid turning to credit cards, overdrafts and other forms of debt.

"This Christmas may not be very far away, but there's still time to set some money aside, which could go towards presents and other expenses. For example, putting £20 a week into a savings pot between now and Christmas Eve could give you around £120 to spend - which could make a big difference to your overall festive bill.

"Plus, if you begin saving in the New Year, you could stand yourself in good stead for Christmas 2012 - which is certainly a New Year's resolution worth making."

FACTFILE:

thinkbanking provides access to a current bank account that makes it easier to budget, by ring-fencing money needed for regular commitments, including savings. The 'Money Manager' service helps customers to manage their accounts effectively. The account comes with predictive banking which can let customers know if they are running short for their necessary expenses. thinkbanking accounts don't require a credit check and are available to UK residents over the age of 18.

For more information, visit the thinkbanking website at www.thinkbanking.co.uk.