Enjoy your Christmas without the hangover

Keep the costs of buying presents to a minimum with Teresa Hunter's tips for festive shopping on a budget . . .

• Christmas spending can become difficult to control

THREE years into recession, and with potentially the hardest year yet to come, we can all be forgiven for playing Scrooge this Christmas. It is easy to get carried away with seasonal spirit, but a financial hangover will leave you with more than a thick head for a morning. You'll have a crushing migraine and sleepless nights for months to come.

But if you shop wisely, you and your family can still have a fun-packed holiday without breaking the bank. Scotland on Sunday suggests 25 ways to cut costs and stay on the right side of the bank manager as well as friends and family this festive season.

1. Draw up a budget

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Decide how much you can afford to spend on presents this Christmas, then knock 10 per cent off, as you are sure to overspend. Divide this sum between the number of presents you have to buy. Start thinking of ideas with this number in your head and do not exceed it.

2. Write a shopping list

Draw up a shopping list, price it before you go out and stick to it. Do not get carried away or panic buy. Never shop on an empty stomach or after a row.

3. Use cash

Although extra care is needed with bags, purses and wallets, if you find keeping within your shopping limits difficult, take out money from the bank and make your purchases in cash. Most people find it more difficult to part with readies than to simply keep handing over debit or credit cards. It has the added advantage that once the cash has gone, it is gone.

4. Avoid bank charges

Do not let your current account drift into the red without first consulting the bank manager. You'll be flattened by the charges. If you can't afford to buy something without going overdrawn, then don't. If you are determined to proceed, speak to your bank and arrange an overdraft.

5. Use cashback cards

If you have a cashback credit card, use it for all purchases. Capital One and Egg offer 1 per cent refunds. American Express gives new customers a 5 per cent cashback pledge for three months. However, Amex cards are not accepted everywhere.

6. Stay away from store cards

The easiest way to spend is using store cards, but it is also the fastest way to get trapped in debt. Avoid them. The only time it makes sense to use one is if you are offered a significant discount off whatever it is you are buying. But once that purchase is complete, cut it up.

7. Avoid credit card penalties

If you exceed your credit card limit or are late with the minimum payment you will be hit by penalties, which can soon ratchet up. Keep a close eye on your balances and always pay the minimum required on time.

8. Check prices before you go

Use price comparison websites such as kelkoo.co.uk, pricerunner.co.uk or mysupermarket.co.uk. For the cheapest games and DVDs, try www.find-dvd.co.uk and www.find-games.co.uk. The site www.hotukdeals.com has a forum where users post any good bargains they have spotted.

9. Buy online

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Many items are sold cheaper online than through high street stores. Always check before you buy. When hunting for toys a useful site is www.thetoyshop.com.

10. Cut out coupons

Look out for money-off vouchers in newspapers and magazines. Don't forget in-house magazines at stores and supermarkets. Cut out the vouchers and make sure you take them with you when you go shopping.

11. Internet vouchers

See if there are discount codes for that online store by checking out www.myvouchercodes.co.uk for money-off vouchers and promotional codes.

12. Check out cashback sites

Sites such as quidco.com and giveortake.co.uk refund a percentage of the purchase price to you, although it may take some time to go through.

13. Remember cash alternatives

Make the most of free money via loyalty points and club cards. Tesco Clubcard loyalty points, for example, can be swapped for gifts and days out, although the scheme is not as generous as it was last Christmas.

14. Make the most of freebies

The web is full of sites offering freebies, such as cosmetic samples or chocolates. Just Google search "freebie". Alternatively, use recycling sites such as Freecycle to pick up a present which is no longer wanted. Finally, check bbc.co.uk/tickets for free tickets for studio broadcasts.

15. Clear out before you shop

Put some of last year's unwanted presents on eBay so you can raise money to go shopping with.

16. Bulk buy

When buying online, get it all at the same time, as many sites waive postage for orders over a certain limit. Consider three for the price of two offers, but carefully, as they sometimes do not offer the value claimed.

17. Secret Santa

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If you have a big family or group of friends, rather than buying for all, do a Secret Santa. Here you dip into a basket for a name and buy for that individual, with the gift donated anonymously.

18. Cut wrapping costs

Look out for high street and online retailers that offer free gift-wrapping. Alternatively, save attractive newspaper pages and wrap with these. They can look surprisingly stunning, particularly if the stories have a special meaning for the recipient.

19. Keep receipts

You are only legally entitled to return goods which are faulty. At Christmas, however, many leading stores will allow unwanted presents to be exchanged for something else or another size. But they are under no obligation to do so. It is vital to keep receipts. Some shops, M&S for example, will only provide a cash refund with a receipt. In any event, once the sales start you'll only get cash or exchange to the value of the sale price without a receipt. Each time you buy, ask the assistant: "If it doesn't fit or they don't like it can they exchange it or get their money back?" Write the reply on each receipt so you have a record.

20. Be careful with charities

Cards in particular can be a rip-off. Although charities rely on the money they raise throughout Christmas, it is important to buy in the right way.

Some cards bought on the high street donate as little as 5p in the pound to the charity. To maximise your donation, buy direct from the charity via its website, catalogues or shops, or via "cards for good causes" outlets. Find your nearest outlet at www.cardsforcharity.co.uk

21. Make your gift count

If you hate the waste at Christmas, agree with your family that instead of giving each other gifts you will spend the money on those who need it. Oxfam operates a Christmas gift system, Oxfam Unwrapped (www.oxfam.org.uk/shop/oxfam-unwrapped), whereby you choose a gift, which can be anything from a goat to mosquito nets. Cafod has a similar scheme (worldgifts.cafod.org.uk/) with items such as a temporary shelter at 9. Or you can give someone the gift of sight by paying for a 17 cataract operation (www.giftofsight.co.uk, also useful: www.goodgifts.org).

22. Consider a financial gift

The bonus of opening a savings account for a child is that many come with little presents. This way the child gets some toys and money as well. Check the interest rate to make sure he or she is earning well.

22. Premium bonds

These are a way of giving cash and holding out the possibility of a big tax-free win. Only parents and grandparents can buy bonds for under 16-year-olds, not uncles or aunts. The minimum investment is 100.

23. Shares that come with freebies

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Many companies offer special concessions to shareholders, which in some cases only require the purchase of a single share. Laura Ashley, Next and Marks & Spencer give discount vouchers, while Legal & General offers discounts on insurance. Visit www.h-l.co.uk/free-guides/shareholder-perks

24. Novelty shares

An attractive collectable item is a framed historic certificate for a bond or share, which holds out the prospect of rising in value over time. Popular are early railway or banking shares, or anything linked to the gold rush or dotcom boom.

25. Free sports membership

Many gyms and sports clubs offer reductions or free membership for up to three months after Christmas. Sign up a loved one.