If you want to enjoy Christmas without it leaving you with a financial hangover in January then the earlier you start to plan, the better.
Get a plan in place as soon as possible and you can make the most of Christmas without the stress. If you’re looking this article over in December and worrying you have left it too late, do not panic! There are still plenty of things you can do to cut back.
Plus you can start to plan how you will afford Christmas next year.
Here are all my top budgeting, festive money saving strategies and frugal tips to help you avoid overspending this December.
You may also like these thrifty Christmas tips.
Embrace a budgeting mindset
Times are tough and money is tight. Household disposable income is lower, mortgages are more expensive and just the basic stuff we have to buy every month to live is only getting more expensive.
That means the idea of being able to afford Christmas might fill you with a sense of panic. A very natural response to such feelings of stress can be to hide away from the problem and not even look. Also known as the Ostrich Effect.
Doing this may help you avoid more stress in the moment, but it’s unlikely to result in the situation getting better. And could even mean you have a worse situation to deal with when you are forced to remove your head from the sand.
The solution is not to just wait and see and hope it works out. You need to plan:
- How much can you afford to spend
- Who you need to buy for
- What you will buy
- What events/hosting you need to budget for
- What you will not buy because you don’t need it
If you approach Christmas on the whole with this mindset, that you will manage your money, make a plan and stick to a budget, then you’re much more likely to emerge from Christmas with happy memories and not filled with dread at the state of your bank balance.
Figure out your budget
That leads us on to the next thing to do which is figuring out your budget.
Money Supermarket found the average UK household expenditure for Christmas was £1,811 last year, while in the US it was just under $1,000.
If you’re taking into account food and gifts for multiple family members along with parties and events, then this seems about right to me.
But of course it depends on how many kids you have, how many people outside your household you buy gifts for and whether you are cooking Christmas dinner and for how many people.
A good starting point is to take a look at what you spent last year and analyse what that money went on.
Is this amount affordable for you this year? If it’s not, then look at places where you can make cuts, and we will be talking about some money-saving ideas shortly.
Once you have a budget, then make sure you are setting money aside now ahead of December. You do not want to leave all the heavy lifting to your December pay packet. Save from your October and November salary as well.
And from January start saving for next Christmas so you’ve got a headstart.
Here’s a good way to break it down:
- Saving £1800 in 12 months means setting aside £150 a month.
- Saving £1800 in 3 months means you have to save £600 a month.
Again, this is an example figure and some of you may spend less, some may spend more.
Track your spending & gifts
Once you have decided on a budget, now you need to track your spending and make a plan for what you need.
I have a cool Christmas spreadsheet you can use to keep a track of your budget and what gifts you have bought, including what you planned to spend and what you actually spent.
Make a list of all the people you need to buy for and allocate a set amount you will spend.
Plan what your Christmas groceries budget will be and how much food you need to buy.
It is so easy to overspend on food at Christmas, everything looks so amazing. But even though it’s Christmas, the same food shop rules apply:
- Buy what you need
- Plan so you don’t waste food
- Take advantage of offers but don’t let them sell you food you don’t need
- Use cash back to save money
- Do a stock check of the food in the cupboards and fridge freezer just so you can use stuff up, make room and not overbuy food
As part of the organisational process, I also suggest that you decide on a single place you can keep gifts and cards. If you have them spread out all over the house you may lose track of what you bought. I know one year I went way overboard with stocking fillers for the kids because I had just lost track.
When planning what to buy for kids it can help to categorise the gifts so they get a variety and that in itself can help stop you overbuying. For example try the five gift rule – something they want, need, will wear, read and something to do. This just helps focus the mind when writing your gift list.
Consider a no gift pact
I have two kids and they are the main focus of our Christmas gift budget.
I know this may be controversial with some families but if money is tight then consider a no gift pact with other adults in your family. Me and my husband regularly do this and some years haven’t bought each other anything. I’ve also done this with my brother.
I think if there is something you know someone will love then great, it’s lovely to buy them something. If you feel that they get all the stuff they need for themselves, they have a lot of stuff, they’re fully kitted out for hobbies, then why put yourself under the pressure? They may be feeling the pressure too.
Alternatively set a family gifting budget or do a secret Santa among your relatives so you each only have to buy one gift.
You can also consider making gifts.
One year I made Christmas chutney for wider family members and put them in pretty jars with handmade labels.
Do not rush
One of the main reasons I plan for Christmas ahead of time is that I know when I am rushed, I spend more.
I panic about what I have to buy, I do not seek out best price and best value for money, and I inevitably end up spending more than I needed.
So, give yourself plenty of time to research the gifts you are looking at buying.
Track the price of things, especially big ticket items. A few years ago I bought our kids Amazon Fire Tablets. I had taken a look at pricing on Amazon and seen they always discounted these around Black Friday. So I waited until then to purchase them and saved around 40%.
While we’re talking about sales, it’s a good idea to make a note in your diary of key sales dates that may help you get gifts you need for less. Very and Argos to half price and special buy two for £20 deals.
Whatever you do, don’t allow Christmas sales to make you spend beyond what you planned to spend. Stick to your list.
Don’t order turkeys in advance
Companies start emailing me in September asking me to get my order in for the Christmas turkey now, but I never do this.
This is because I like to wait and research the prices. I buy in the days before Christmas. I get that might strike fear in the hearts of people who think all the turkeys will be gone, but in my experience there are still some turkeys on the shelf on Christmas Eve.
If you love to get ahead, then a frozen turkey is a great budget option as it is generally way cheaper than fresh.
The big takeaway is, compare the prices of turkeys closer to the big day and seek out the best price. If a turkey is still stretching your budget, then consider getting a turkey crown or a chicken instead. It tastes different, but it still makes a delicious dinner.
No clothes rules
Christmas is a time for parties and special events, that means that brands are vying for your attention with their winter party clothes and Christmas PJs and jumpers.
Try to put into place a no buy rule for new festive occasion clothes or loungewear.
If you are anything like me then you probably already have a couple of festive jumpers and some nice dresses and outfits you could wear over the holiday season.
Remind yourself you do not need anything new and use those reliable frugal questions to stop yourself impulse spending:
- Do you need it?
- Do you have something else that serves the same purpose?
- Can you afford it? If you do not have the money, and by not having the money I mean in your overall budget for the holidays, not just going on what’s in your bank account right now, then just don’t do it.
It is not worth going into debt for something you will wear once, and frankly no one cares more than you that your dress is brand new or from the latest collection. You don’t need to impress anybody with new stuff.
One thing that makes it very difficult not to buy new seasonal clothes is the one-off celebration days we are committed to by outside forces, for example Christmas jumper day at school.
Christmas jumper day when you have two kids does not have to mean buying two jumpers at £15 to £20 each that then only get worn once.
If your school has organised a Christmas jumper day, rather than buying new, look to secondhand online marketplaces like Vinted and FB Marketplace. You will find items that have only been worn once or twice.
Also try to swap jumpers with friends, or in local community Facebook groups so if your child has outgrown last year’s sweater you can hand it over to someone who needs it.
If you do have to buy new, try to buy it a little baggy so it could feasibly be worn again next year.
Alternatively, try to buy a sweater in a colour and design that is not specific to Christmas but ok for the winter period as a whole. For example something in a Fair Isle pattern that feels wintry and festive but can be worn at any time during the winter months.
Or do a DIY Christmas jumper by adding tinsel or small fairy lights to a regular jumper.
No new decor
On a similar vein, I also avoid the hyper consumerism around new Christmas decor. Every year there’s a new trend in decor trying to sell you on an entirely new set of decorations.
If you are tempted, then consider heading to wherever you store your Christmas decor and remind yourself of what you already have.
My mum handed down to us a Mr Men Merry Christmas banner that she has had since forever. It’s at least 40 years old I think. Now I have that and use it every year.
Reflecting on my own childhood Christmases reminds me that I loved seeing the same decor out every year. It felt nostalgic, familiar and cosy to have those things out again that reminded me of good Christmases.
If you do want to refresh your Christmas decorations, consider making your own. I made our own door wreath one year and actually it was a lot of fun and you can get most things needed just be scavenging in your local woods for things like holly.
Make it a magical Christmas for less
One of the things that piles the most pressure on us at Christmas is the feeling of needing to make it special for your kids.
But you can do that for less. Kids, especially little ones, do not care at all how much money you spent on them. They just get enchanted by the whole vibe of the Christmas season.
Inject magic using low cost festive fun. For example, you can get free letters from Santa from the Royal Mail. You need to get your children’s letters in by the end of November though. There are similar services from postal organisations in the US and elsewhere too.
And another way is to simply enjoy the Christmas lights. Head out in the car after dark and explore the streets where neighbours decided to go big or go home. They’re already at home, but you get what I mean. We used to always drive down Oxford Street in London on our way back from seeing family at Christmas so we could see the lights. It’s a memory that has stuck with me.
I hope this has helped you get started with planning a Christmas that will be magical but won’t leave you struggling in the New Year.
If you need extra cash then see these tips for earning money ahead of Christmas.
