Christmas is just around the corner. For a lot of people, it’s the best time of the year and for others, it can bring on a lot of financial stress. Between presents, decorating, dinner, and everything else, it’s definitely one of the most expensive times of the year.
In this article, we will look at some tips and tricks you can use to budget for Christmas this year. After you read this, your Christmas will hopefully be a lot less stressful.
What Is The Average Christmas Spend Person
According to Statista, the forecasted average Christmas spending was £1204 per head throughout the Christmas period. Here’s a breakdown of the average spending depending on where you live.
From data collected by YouGov in 2022, we can see how the average spending breaks down across gifts, hotel stays, food and drink, travel, social events and new clothes. The data they have collected comes in with an average spend of £642.
However, this data is collected through surveys where people state what they “Think” they will spend. People tend to underestimate how much they will actually spend over the Christmas period.
In this same data set, 25% of people said they couldn’t afford Christmas in 2022. So, if you’re struggling right now, don’t worry, you’re definitely not alone.
18% of people said they would be using a credit card to pay for Christmas. This is definitely not something that we would recommend here at Money Sprout.
Let’s jump in and take a look at how you can budget for Christmas this year.
How To Budget For Christmas
Most of us, including myself, can get a little carried away over Christmas. It’s very easy to overspend on that gift for a special someone, go overboard on the decorating or have a few too many nights out. Let’s take a look at how you can budget and plan this Christmas to make it less stressful.
Budget Earlier In The Year For Christmas
Having a successful financial Christmas starts long before December. We all know that we spend more in the month of December than most other months in the year, therefore we need to budget for that beforehand.
Having a plan ahead of time can make Christmas much easier. I would recommend creating a monthly budget and including Christmas on it. If you think you’ll need an extra £500 in December for Christmas, you can likely use a portion of your December salary, say £200 and then save the other £300 throughout the year.
Each month put away £30. Personally, I would put this money into a savings account such as Chip or into a separate Christmas pot on Revolut or Monzo. When Christmas comes, you’ll have £330 ready to go.
Rather than putting Christmas on a credit card and paying the money off monthly after Christmas with interest on top, simply save for it beforehand.
If you have never used a budget, I would recommend checking out our 50/30/20 budgeting template.
- Monthly Budget Overview
- Custom Categories
- Transaction Log
- View Daily Spending Overview
- Track Needs, Wants, Savings/Investments & Debts
See How Much You Can Afford To Spend On Christmas
I would highly recommend only spending what you can afford at Christmas. A great way to figure this out is by using a budget as we mentioned above.
Work out your income and expenses each month and see how much you have left over. After paying essential bills and putting money towards saving/investing each month you should have some money left over for your wants each month.
I recommend that people save a portion of this wants money for the two big yearly expenses, a holiday and Christmas. Usually, a summer holiday and Christmas are two months we spend more than normal. Setting aside a little bit of money each month for both of these events, makes it much easier to pay for them without going into debt.
Create A List Of Everything You Need
Before you go out shopping, create a list of the people you need to buy for and the items you need to purchase for them.
When you do start shopping ensure to only purchase the things you actually need. If you go shopping, whether it’s online or at the shops, you’ll know exactly what you need to purchase and avoid buying unnecessary items.
Start Shopping Early When Possible
As it gets closer to Christmas, you may find that items start to go up in price or the initial items you wanted our out of stock, only leaving more expensive alternatives. If you see stuff on sale throughout the year that looks like it could be a good present for someone, purchase it then.
You can even use the Christmas fund you have been saving up to purchase these items, meaning it won’t affect your monthly budget.
Shop Around
It’s important to always shop around, especially when you’re shopping online. It takes little to no time, to check some other stores to find the best prices for the items you’re purchasing.
Sometimes these savings can be significant depending on what you are purchasing. It pays to shop around.
Set Price Limits On Gifts With Partners & Friends
Chances are, you’re probably not the only one struggling with finances this year. With your family and partners, ask them if they’d be willing to set a smaller budget on gifts this year.
A lot of the time we buy unnecessarily expensive gifts just because we know the other person will. Two people then nd up with expensive things that they might not have even wanted in the first place.
Setting a smaller budget is a great way to get creative and actually find something really thoughtful or interesting that the other person will love.
Even with your partner, rather than buying each other expensive gifts this year, agree not to get gifts and instead use the money for something else you are working towards. This could be a house, wedding, or holiday.
Re-use Last Years Christmas Decorations
Christmas decorations are another huge expense during the Christmas season. Let’s be real, last year’s decorations in the roof space were perfectly fine. 90% of your lights and tinsel can be re-used.
You may need to pick up a few bits, but this is somewhere you shouldn’t need to spend much money if you have decorations from years past.
Use Cashback Sites When Shopping
There are cashback sites out there like TopCashBack, which will give you a % of your spend back on certain websites. While it’s not a huge amount, it all adds up. Many popular sites such as ASOS, Asda, Currys, Amazon and more.
Only use this when you’re purchasing something you were going to purchase beforehand. Make sure not to use it as an excuse to buy something because you are “saving money”. You’re not.
Christmas Isn’t All About The Presents
I think it’s important to remember that Christmas is more than just presents. It’s about spending time and having fun with your family.
One of my most memorable Christmas memories is having to find my Santa Presents at Christmas. My parents would hide them around the house with different colored wrapping paper for each of my siblings. Now I’m 26, I have no idea what those presents were but the memory of finding them is what sticks.
Think of creative ways you can make your Christmas more fun and enjoyable without having to spend a lot of money.
Avoid Debt At Christmas
I would avoid debt at all costs around Christmas. If you have to take on debt, you can’t afford it. It’s as simple as that. By taking on debt you put more pressure on yourself in the months after trying to pay the money back not to mention the interest you are paying on top.
This is why it’s so important to budget and save for it beforehand. Rather than paying back the debt at an extra cost, simply plan ahead, avoid debt and save for it ahead of time.
It can also be tempting to use buy now pay later apps such as Klarna or Paypal credit. Again, these are just delaying the pain. Getting into debt should be for extreme emergencies only. Christmas unfortunately does not fall into that category.
If you are already in debt, I would check out our guide to getting out of debt fast. You definitely do not want to be adding to a pile of debt that is stealing interest from you every single month.
Final Thoughts
These tips will help you to have a happier, less financially stressful Christmas this year. In my opinion, the best thing you can do is save for Christmas throughout the year, allowing you to avoid taking on expensive credit card debt.
Overall, enjoy yourself and have a great time with your family and loved ones. That’s what Christmas is really about.
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