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Saving money for Christmas

If you’re looking for tips, a way of reducing your Christmas expenses, or just want to understand what’s considered a ‘normal’ amount to spend, we have you covered.
Christmas tree with festive decorations | Wealthify
Reading time: 4 mins

Christmas can be an expensive time of year, there are presents to buy, lots of wonderful food, decorations, festivities, seeing friends and family, Christmas outfits… the list goes on. But what can you do to save for Christmas and how much is normal to be spending?


How much should you save for Christmas?
First things first, what’s a ‘normal’ amount to spend at this time of year? Well, according to polls, Brits spend an average of £1,116 – with just over £380 of that going on presents.[1] That’s a pretty big chunk of money no matter who you are, so it could be a good idea to financially prepare yourself in the months running up to Christmas. Obviously, this is an average figure – you may spend more or less than this, so it may be worth sitting down and figuring out what the ‘right amount’ is for you.

One study found that nearly a third of people go into debt in order to pay for Christmas, with many using a ‘buy now, pay later’ scheme. The same research found that those going into debt take an average of seven and a half months to repay their debt.[2]

This approach poses some real problems, especially as many of these schemes charge high interest rates, meaning that you may end up paying a lot more than you borrowed. In addition to this, debt can cause stress, which in turn can reduce your enjoyment of Christmas and you could even become resentful of spending money on your loved ones.


Make a list and check it twice
Christmas doesn’t have to be an expensive affair. Yes, everyone always wants all the bells and whistles, but it could be worth asking if you’d really notice them if they weren’t there. Things like the tin of celebrations that are always on the go, desserts with every dinner in December, over the top festive decorations, Christmas jumpers for every day of the week, the list goes on and on.

Before you get sucked into the festivities and start frivolously spending money, it could be worth making a list and planning your own budget to decide how much you actually want to spend. There’s no need to be a Scrooge either, you can plan an amazing Christmas that suits you without over spending.

A good way to get started is to set a budget for each person you’re buying presents for. If you have young children, then it may be worth just getting them a few, cheaper items and putting some money away for the future – or consider investing in a Junior ISA. Once you’ve figured out your present budget, then you may want to look at additional spending to your monthly budget for things like food, clothes, and going out.


Start saving in advance
The thing with Christmas is that it happens every year, and that means you have all year to save for it. If you are an average Brit, and you spend £1,116 on Christmas, then putting away £100 each month could cover the cost. Breaking it down into smaller monthly costs might be more manageable for you and could help to plan your budget.

You may have heard of Christmas Savings Clubs, which you pay into monthly to cover the cost of your presents and festivities. However, it’s a good idea to do plenty of research into them before committing – often they don’t pay interest, you’re tied in with them, your money may not be protected by the Financial Services Compensation Scheme (FSCS) if they go bust. This happened to one company, Farepak, in 2006 leaving more than 100,000 Christmas savers out of pocket.[3]

If you like the idea of Christmas savings, then you could choose to open a savings account and set up a Direct Debit to pay in each month. Then, when Christmas shopping season rolls around, you can choose exactly what you want to do with your money.


Having a smaller Christmas
If 2020 has taught us anything, it’s how to do things on a much smaller scale than usual. Christmas is about spending time with friends and family, so there’s no need to be a Grinch because you don’t want to spend money. Why not tell your friends and relatives that you only want to do one present each, or maybe even go in on a secret Santa? There are plenty of fun ways that you can make Christmas special without impacting the joy that the season brings.

Think about having a more intimate Christmas with a little less trimming. You could swap out those lavish dinner parties for a festive movie night, or a few drinks down the pub for a jigsaw puzzle with your family. There’s plenty of options to maintain the Christmas spirit while working to save the pennies.



1: https://yougov.co.uk/topics/lifestyle/articles-reports/2019/12/16/average-brit-spends-1116-christmas

2: https://www.stepchange.org/media-centre/press-releases/real-cost-christmas.aspx

3: https://www.theguardian.com/money/2006/nov/08/consumernews


Please remember the value of your investments can go down as well as up, and you could get back less than invested.

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