Christmas can be one of the most expensive times of year. The more you plan your finances around it, the better off you’ll be going into the new year. We explain how.
Christmas is right around the corner, but there’s still time to do some budget planning and have some conversations with loved ones about spending limits.
You may have done some shopping on Black Friday, when many buy their festive gifts. But there is plenty more to prepare for so you that aren’t left with a financial hangover in the new year.
In this article, we suggest you:
- Decide in advance how much you want to spend
- Talk to your loved ones about Christmas spending
- Draw up a budget
- Make some money selling things you no longer use
- Prepare for the aftermath with a low-spend January
Read more: Top credit cards to use this Black Friday and Cyber Monday 2023
1. Decide in advance how much you want to spend
Be realistic about what you can afford this Christmas. With living costs now taking up such a large proportion of people’s incomes, take a good look at how much you can actually afford to spend this year.
Because Christmas spending can spiral and debt charity StepChange said it had advised more people on January 3 this year than on any day last year.
You’re not alone if you’re thinking about cutting back. Almost half of adults are planning to reduce their overall expenditure by an average of £280 compared to last year, according to TopCashback.
Think about which Christmas customs matter to you and what you want to prioritise. Do you want a real tree? Travel to see family? A family outing to the pantomime? A slap-up meal on Christmas day?
There are many ways to celebrate – so don’t limit yourself to expensive socialising.
Read more: 20 money saving tips you can use every day
2. Talk to your loved ones about Christmas spending
Hopefully, getting a partner or family on board with your spending plans will be straightforward.
This isn’t the first Christmas where finances have been so prominent in people’s minds. Last year 41% of shoppers planned to buy fewer gifts while 6% did not plan to buy any at all, according to a poll by Ankorstore.
It’s important to explain to loved ones how you want to do things. Start conversations with your partner, children, friends and family about presents, hosting and outings. You may not get them on board but stand your ground about sticking to your budget.
And ask people what they want for Christmas, says finance blogger Kia Commodore.
“There’s nothing worse than opening up presents on Christmas day and it’s something that you’re not interested in, in the slightest.
“To avoid this happening to your gift recipients this year, ask them what they want. They can write a list of items that you can choose from and that way, you don’t end up wasting any money on unwanted gifts.”
Read more: How to teach your kids about money
3. Draw up a budget
Do draw up a budget rather than depend on shaky mental arithmetic – this way you won’t miss hidden or surprise costs.
A budget is a no-brainer, according to Commodore. “It can be so tempting to go overboard on gift-giving at this time of the year but, if you have a budget in mind, you’ll be able to be more mindful when shopping for gifts and not break the bank.”
Try out our Budget Planner.
4. Manage your debt
Last year, one in twelve people admitted to relying on credit for Christmas, according to StepChange.
Credit card costs should be a consideration at any time – but especially at Christmas when spending goes up. A 0% balance transfer credit card can maximise breathing space.
A 0% balance transfer lets you move debt from an old credit card to a new one that has 0% interest rate. Interest-free periods of over 20 months are available: NatWest and RBS currently offer fee-free 0% balance transfer credit cards for 14 months.
If you’ve drawn up a budget that includes the need for credit for Christmas spending, say for a big, one-off purchase, consider a 0% interest credit card which could save you money on interest.
Bear in mind you must repay at least the minimum each month (more if possible) and budget to clear the balance by the end of the term – otherwise, you will be hit by interest payments.
5. Book train tickets now to save some pounds
Usually, to get a bargain on train travel you need to book tickets about 12 weeks before you want to travel. We’ve just passed the 12-week mark – but only just, so cheap advance tickets to your choice of destination may still be available.
Similarly, booking ahead for events, shows, concerts and accommodation allows you to spread the cost over a longer period.
Read more: How to get cheap train tickets
6. Open the doors to the gift cupboard
Start stockpiling everything from that spare item on a 3 for 2 deal to any new unwanted gifts you’ve got kicking around.
“Even a spare bottle of wine or box of chocolates from a supermarket ‘meal for two’ deal can go in it,” said finance expert Sue Hayward.
“It saves last-minute panics and impromptu-spending nearer Christmas – and a bottle of wine is always a handy standby gift if someone pops round with gifts.”
7. Make some money selling things you no longer use
Dedicate some time to clear out things you no longer need and you could make some money by selling them in the run-up to Christmas.
Yes, it’s an effort, but if you’re motivated to make enough money to cover the cost of a particular expense you could even end up quids in.
There are several platforms you can sell on, such as Depop and Vinted (for clothes), Facebook Marketplace and Olio (for household goods such as furniture, appliances, sports gear) and eBay.
I made £50 in October selling clothes I no longer wear on Vinted and I’m hoping to make £200 before Christmas to cover the cost of a house party I throw every year.
8. Cashback is your friend
An old but gold rule: earn money as you spend on Christmas with websites such as TopCashback and Quidco.
Simply set up an account and click on the retailer’s website to shop as usual – any purchase is tracked for you to earn a percentage of it back. The amount of cashback varies, from 1% to 15%.
Read more: The best credit cards for earning rewards
9. Prepare for the aftermath with a low-spend January
Prepare mentally in case you do end up overspending. A low-spend period in January doesn’t have to be miserable. Mum-of-five Claire Roach has been doing a no-spend January since 2016 and says it has helped her family get back on track financially and pay off Christmas debts by February 1.
“I ask for toiletries for the family at Christmas so we are not buying them in January, do a serious food plan and ditch eating out, coffees, takeaways and pocket money for the children. We have lots of film nights and board game championships instead,” she said.
Read more: My New Year’s resolution is to stop spending money – and it is possible
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