8 Top Tips for Sticking to Your Budget this Christmas
Christmas should be the most wonderful time of the year but while the kids might be too excited to sleep, it’s money concerns keeping many parents awake at night. With the cost-of-living crisis and rising food and energy bills, family finances are under pressure this year.
Don’t stretch your household budget to breaking point for the sake of two weeks in December. Another economically tough year lies ahead, so your aim should be to start the New Year in a positive mindset and a healthy financial state, instead of panicking about that looming credit card bill.
So how can you have a magical Christmas without overspending? Here are my 8 top tips for managing your money effectively this festive season.
1. Make a list, create your budget and stick to it.
Work out exactly what you can afford to spend this year and assign an amount to everything on your list of gifts, food, decorations and entertainment. It’s a good idea to write it all down and look at your festive outgoings as a whole. Perhaps you’ve stuck to your present budget but haven’t accounted for that spontaneous £100 spend on pantomime tickets.
Prioritise what’s most important to you. This might mean choosing to spend money on one really special experience with your children but explaining to work colleagues and friends that this year you won’t be buying them the small gift you normally do. Everyone is in the same boat and people appreciate honesty.
Many people trip up by continually adding little gifts, treats and decorations to their weekly grocery shop. By doing so we lose track of our spend and then can’t work out why we’ve run out of money at the end of the month. Avoid this by scheduling specific days and times purely for Christmas shopping, even if its online, to avoid impulse purchases. Have your list and spending limit for each person with you when you shop and seek out deals and money-off codes. Try to buy several items from one site to avoid multiple delivery charges and to benefit the environment.
2. Save money on kids’ presents
We all want to make Christmas as magical as possible but in years to come children will remember the rituals and excitement of the big day, not the stuff. Don’t be afraid to buy second-hand. You can find high-quality kids’ clothes and toys on sites like Vinted and Facebook Marketplace for a fraction of the price. Or upcycle something an older sibling no longer uses, like spray painting a bike they’ve outgrown and adding a new basket or bell so it feels like new.
If you have several kids and a busy schedule, you could give each child a voucher for a day of quality one-on-one time together.
When it comes to stockings, kids love to open as many things as possible on Christmas morning so fill them with things they actually need like new pants and socks, shower gel, deodorant or gloves. Avoid wasting money on the plastic tat that never gets played with after Boxing Day.
3. Don’t splurge on extended family
Think quality, not quantity. If you’re seeing wider family during Christmas week, Secret Santa is a fun way of making sure everyone gets one great present without spending a fortune buying for every aunt, uncle and in-law. There are lots of handy apps that will organise Secret Santa for you.
If you do have several people to buy for, think about giving experiences like babysitting or decorating vouchers, or an IOU for a three-course home cooked meal. For other children in the family, don’t be afraid to regift things that have been given to your own kids but have been never used.
4. Keep track of your spend
When you’re ordering a lot of presents in a short period of time it’s easy to lose track of deliveries. Make sure you keep a list and check that everything you’ve paid for has arrived and that any money from returns has gone back into your account.
Having a good declutter in November helps to create space for Christmas, and the proceeds from any items you sell can go straight into the Christmas spending budget.
5. Get creative with gifts and decorations
People love to receive unique and thoughtful gifts. Making your own presents is a great way to way to save money, so whether it’s chutney, fudge, cookies, bath bombs or Christmas decorations, make an occasion out of trying your hand at homemade. Involve your family by going for a nature walk and collecting greenery to make place settings.
Instead of buying crackers, try making your own with a scratch card or chocolate inside instead of the usual flimsy plastic toys that end up discarded on the kitchen table.
Save money on wrapping by using brown paper and twine with stamps to decorate the paper, or cut festive shapes out of cardboard delivery boxes. You could even save the brown paper that comes inside parcels. Donate £10 to charity instead of sending Christmas cards and send a personal email explaining your decision to everyone you would have sent a card to, along with your news and best wishes. You’ll save more than you realise on cards and stamps.
6. Savvy socialising
It’s the season to connect with our nearest and dearest but that doesn’t have to mean blowing the budget on inflated festive menus. Suggest eating at someone’s house instead of going out to a restaurant for a Christmas get-together, but take the pressure off the person hosting by each bringing a dish or splitting the cost of the food.
For a memorable bonding experience, bring a group of friends together to learn a new skill and create something unique for Christmas, like making a wreath from foliage everyone has gathered beforehand.
If you’re hosting on the big day itself, don’t be afraid to buy a lower brand for certain items – no one needs luxury parsnips! The more you can cook from scratch, the more money you’ll save so make certain things in advance and freeze them to reduce stress on Christmas morning. Think about how much people eat realistically and try not to over-cater.
7. Recognise your spending triggers
We all have them. If yours is a ‘compare and despair’ reaction when you look at other people’s beautifully decorated houses or matching festive outfits on social media, try to limit the time you spend on those channels in December. Swap endless scrolling for a fresh air walk and a coffee with a friend for some healthy real-life perspective. Try to remember that what you see on social media is only a tiny, edited fraction of reality.
Equally, if those enticing ‘limited time, exclusive discount’ emails that land in your inbox are likely to prompt a splurge you’ll regret, unsubscribe from certain mailing lists for a while. You can’t miss what you can’t see.
8. Plan ahead for next Christmas
This year’s spend (if it was affordable) should be next year’s budget. Spend 10 minutes in December setting up a direct debit starting in January to save for Christmas 2023. If your overall budget is £500, you’ll need to set aside £42 each month to give you peace of mind that you’ve covered next year’s outgoings.
If you’re really organised, try to pick up gifts throughout the year, but make sure you keep a written log of what you’ve bought (and where you’ve hidden them!).
For any large decorative items that you need to upgrade, like a new artificial tree, try to make do this Christmas, wait till the January sales and pick up a bargain. If you keep it for many years, a good artificial tree can be more cost-effective and environmentally-friendly than buying a real tree each year.
Overall, if you remember that conscious, mindful spending is your mantra for the festive season and quality experiences are your goal, you won’t go too wrong.
This Article was written by Amy Goodall Smith, a financial adviser based in Berkshire, and the founder of Goodall-Smith Wealth Management.
Amy is on a mission to empower people with financial knowledge.
Originally Released On 29 November 2022