How much should I spend on Christmas presents?

When it comes to Christmas, there are so many costs to think about - so, how much is too much to spend on presents?
presents under the tree | wealthify.com
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At this time of year, it’s normal to start wondering – how much does the average family spend on Christmas presents? Well, if you’re intrigued, then this article is just for you.

Before diving too much into the specifics of presents, it may be worth reading a quick summary of how much Christmas costs the average family. That way you can have a better understanding of how much, or how little, your Christmas costs you compared to others – and whether you’re guilty of spoiling your loved ones?

We know, we know. How many Christmas films and stories have told us that this holiday isn't all about spending money and having presents? But do we believe that this season doesn’t have to be used to justify frivolous spending, and there’s no shame in spending the bare minimum or going without presents. The most important spending is the time spent with your loved ones.

How much does the average family spend on Christmas?

In the UK, the average family spends £3,240 in December – that’s 29% more than any other month of the year.[1] But what about the singletons or those that aren't the ‘average’ family? Well, it turns out that Brits typically spend a total of £1,116 during the festive period – with a whopping £381.60 of that being spent just on presents.[2]

But celebrating Christmas isn’t always about presents. In fact, people spend significantly more money on food and alcohol during this time, increasing by 20% and 38% respectively.[1] Compared to the average person’s spending over the rest of the year, these two categories have the biggest individual increases – and of course, alcohol is often bought as a present which could mean that this cost straddles the categories of ‘presents’ and ‘booze’.

You may be interested to know that the UK spent 40% more on Christmas than other European countries in 2020 – with 16% of us not being entirely sure of how much money we actually spent.[3] Needless to say, we love feeling festive and celebrating that feeling with our purses and wallets!

 But, enough about the average Christmas spending – let’s look at the people who love this season the most... children!

How much do you spend on kids for Christmas?

Let’s be honest, if money was no object, you’d absolutely spoil your kids. But that’s probably not the best for your bank balance or for their expectations in the long run.

It’s important to note here that everyone is different, and that there’s no right or wrong amount to spend on your child at Christmas. Some families may spend thousands on presents for their little ones, while others may buy second-hand toys to keep their budgets down. Whatever your financial situation, try to gift within your means as stretching yourself to buy more gifts for others won’t benefit you in the long run.

Perhaps unsurprisingly, kids typically have the most amount of money spent on them, and this year parents could be paying as much as £1,000 to get them everything that their little heart’s desire![4]

That’s a lot of money, and it’s largely down to the price of new technology. The most wished-for present in 2021 is the PlayStation 5 – which has had serious supply chain issues, meaning that it has been almost constantly out of stock. As a result, many people are paying well over the RRP of £450 to get their hands on them.

In addition to this, almost half of children are also asking for a tablet (with the Apple iPad) – most of which cost around £200[4] – and a third of children have asked for a new smartphone (with 13% wanting the iPhone 12 which starts at nearly £800).

Most parents won’t spend this much

While many children may want presents worth £1,000, the national average spend for 2020 was around £420.[5] However, this changes geographically, with those in the Southwest spending less and Liverpool being the biggest spenders with an average of £545.[5]

That said, the average UK family only budgeted £350 for Christmas last year.[6] This meant that over 65% of us went over budget – some by more than £250! This has, quite understandably, made people more nervous about their spending in 2021 and many are now worried that they may not be able to afford the Christmas they want this year.

What’s worse is that 63% of parents feel pressured to get their children the latest tech[4] due to frequent pestering from their kids and simply wanting their children to have the same things as their friends.  

Sticking to your Christmas budget

Normally, at Christmas, the only thing you want to be sticky is your sticky toffee pudding - but keeping to your budget can feel almost as good. So, what are some things that you could do to set a realistic budget and try to make sure you stick to it? Here are some ideas:

  • Plan ahead – you know Christmas is coming; it happens on the 25th of December every year without fail. So, why not prepare for it? Start saving bits here and there, buy presents throughout the year, and try and get ahead of the December rush.
  • Look for deals – if you’re buying presents throughout the year then you can keep your eyes peeled for deals, whether that’s discounted prices, buy one get one free offers, or even free shipping! Being smart with your purchases could get you the same things for less.
  • Track your money – overspending is a lot easier to do when you don’t know how much you’ve already spent. Keeping tabs on your money can help you realise when you’re coming close to your budget and enable you to make plans.
  • Cash, not gifts – gifts are great, but you could spend less money and deal with less stress just by giving money as a present. For example, if you give your child £150 instead of spending £200 on a present then they still get a ‘big’ gift and you’ve saved £50. What’s more, if your child is young, you could choose to invest in your child’s ISA instead – that way, this money could be worth even more by the time they’re 18! Please remember that with investing your capital is at risk, as the value of investments can go down as well as up.

Looking at alternative gifts

One of the biggest issues with presents is the clutter they can create – it can feel like the whole period between Boxing Day and New Year’s Eve is spent trying to find a place for all the new stuff you and your little ones have. We’re not always the best gift-givers either, with 15% of people receiving presents they don’t like, 10% of us returning gifts, and another 10% not even being able to remember what presents we received![3]

If you want to break this trend and are looking for ways to save money and reduce the amount of waste or excess you have, then it may be worth looking at alternative gifts. Here are a few suggestions:

  • Days out/ experiences – whether it’s a trip to the zoo, a theme park, or a day driving fast cars, experiences are a great way to give a memorable gift without adding to the clutter in your home.
  • Paying money into their savings – if your child has a Junior ISA, then you could put money away for them in their savings instead of buying more Christmas presents. Less mess, and it could be worth quite a bit more by the time they reach 18 – plus they could use this money to help them purchase something they really want, like a new car or their first home.
  • Cinema Subscriptions – is your little one a movie buff? Getting a cinema subscription not only reduces the number of presents you’ll have to put away, but it could even save you money throughout the year!
  • Virtual gifts – not everything has to be physical. There are plenty of great virtual gifts that you could give ranging from donations to charities and memberships to their favourite activity, or even sponsoring their favourite animal.

If you’re looking to give a gift that keeps on giving, then Wealthify’s JISA could be exactly what you’re looking for. With our simple to use dashboard, your child will be able to understand their performance. Why not share it with them so they can track their investment performance over time, being able to easily see how much they might have waiting for them when they turn 18. That’s a present with a lot of exciting potential that won’t add any more clutter to your house or plastic waste to the tip. What’s more, you could even choose ethical investments for your children and help build towards a greener future for them!

 

  1. https://www.bankofengland.co.uk/knowledgebank/how-much-do-we-spend-at-christmas
  2. https://yougov.co.uk/topics/lifestyle/articles-reports/2019/12/16/average-brit-spends-1116-christmas
  3. https://capitalcounselor.com/christmas-spending-statistics/
  4. https://www.independent.co.uk/life-style/gadgets-and-tech/ps5-christmas-presents-tech-spending-b1765627.html
  5. https://fundraising.co.uk/2020/11/26/average-household-christmas-spend-set-to-drop-but-some-areas-of-uk-plan-an-increase/
  6. https://www.moneyadviceservice.org.uk/blog/we-need-to-talk-about-christmas

 

Please remember the value of your investments can go down as well as up, and you could get back less than invested. If you’re unsure about investing, please seek financial advice.

 

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