Six tips to stay on top of your spending over Christmas - we’re still in a cost of living crisis

23 December 2023, 07:43

Spending over Christmas can be stressful
Spending over Christmas can be stressful. Picture: Alamy

By Kit Heren

Despite often being seen as a time of festive fun for everyone Christmas can be a hard time for many, especially people struggling with money.

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The expectation to have big celebrations with lots of expensive food and presents can be overwhelming, and affect people's mental health.

And although there are signs that the economy is improving, and inflation is coming down, the UK is still suffering through a cost-of-living crisis.

Brits tend to spend significantly more over Christmas anyway, so higher costs could tempt people to get into unsustainable levels of debt.

See below for some good ideas for how not to break the bank this festive season - but perhaps the most important advice is to talk to your loved ones about spending.

Read more: Exact dates you shouldn't travel on over Christmas as 32 million car journeys to take place over festive period

Read more: Can you solve GCHQ's Christmas brainteasers? Put your puzzle skills to the test against Britain's top spies

It's important to communicate about any money worries at Christmas
It's important to communicate about any money worries at Christmas. Picture: Alamy

Make a budget and stay within it

It may seem obvious, but the simple measure of working out how much money you can afford to spend and - crucially - sticking to it, will help you

If you spend without planning, you could easily end up shelling out more than you can afford without realising - and start the New Year with a nasty shock as payments come due.

"Planning and budgeting can help you feel more in control of your holiday spending and make January’s bills more manageable, the government's Money Helper advice service says.

The service suggests that to begin your budget, you should "make a list of family and friends you will be buying presents for and allocate an amount for each person."

And "loved ones are likely to understand and would rather exchange cards than see you struggle financially."

Supermarket reduced food discount sticker
Supermarket reduced food discount sticker. Picture: Alamy

Try not go into debt

It can be tempting to reach for the credit card, or even a short-term loan to buy presents that would otherwise be unaffordable. A quarter of people in Britain worry about going into debt over Christmas.

But try to stay away from getting into debt that could reach unsustainable levels.

It's better to set aside some money each month to pay for Christmas presents and other spending, rather than splurging over the festive period and setting yourself up for trouble.

Being unable to pay back debts will affect your credit score and your ability to borrow in future - which could make important life steps like buying a home much harder.

If you're struggling, you can talk to Money Helper debt advisers for free and in confidence, online or by phone.

You can also check if you're ready to start borrowing with a free advice service.

Overspending at Christmas can lead to a nasty shock when January bills arrive
Overspending at Christmas can lead to a nasty shock when January bills arrive. Picture: Alamy

Think of cheaper options

A good way to avoid overspending is to think of cheaper alternatives to costly Christmas purchases and activities.

If you're organised, you can start doing this as soon as January, by buying up Christmas goods like wrapping paper with big discounts.

You can buy a gift a month over the year to spread costs. Other cheap alternatives could be buying presents second-hand on eBay or in charity shops. If you're able, you could even hand-make gifts yourself.

It's the thought that counts, not how much money you spend.

Christmas dinner can get expensive
Christmas dinner can get expensive. Picture: Alamy

Don't go overboard with the January sales

Even though you can pick up great deals in the sales, be sure not to overspend - especially as you may already be facing bigger bills than usual from December.

A good rule of thumb is, before you buy something, to think: "Was I going to buy this anyway, or am I being tempted by 'savings'?"

If not, then it's not such a good deal.

Don't go overboard on the January sales
Don't go overboard on the January sales. Picture: Alamy

Don't push the boat out on Christmas dinner

If you're worried about the cost of hosting Christmas dinner, there are several ways to save money.

Look out for yellow-sticker discount items, and look round supermarkets for similar products on different aisles at different prices.

For example, MoneySavingExpert found a 100g bag of ground ginger that cost 50p in the world food aisle - but the equivalent item in the herbs and spices aisle was retailing for £1.68 per 100g.

Shop around - don't feel like you have to buy everything in the same place. My Supermarket Compare lets you check the price for similar items in different shops.

You can use supermarket discount codes and coupons from sites like SuperSavvyMe and CaringEveryday.

And you can always ask guests to bring a dish too, if you think you will struggle to feed everyone on your budget.

Don't be afraid to communicate with your family about Christmas money worries
Don't be afraid to communicate with your family about Christmas money worries. Picture: Alamy

Don't be afraid to talk about money worries

Most importantly, if you're stressed, don't feel like you have to hide your feelings.

Others around you may be going through similar worries, and talking about problems is likely to make things easier.

It can be easy to want to overspend at Christmas to please loved ones and show that you care about them - but communicating your budget clearly so friends and family are aware of how much you can spend is more helpful.

Research suggests that most people would find this difficult. Money Helper survey found that about 75% of the UK would be happy to discuss the cost of presents with their partner, but this drops to about a third when talking to their mum, friends, siblings or children, and down to a quarter with their dad.

But it "might help to remember that many people will be struggling this Christmas", the advice service says.

"If you’re spending too much on presents for loved ones, they might feel the pressure to spend the same amount on you, even if they can’t afford to."

It's much better to bite the bullet speak openly about money over Christmas - you are likely to feel better, and so are they.