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How to budget for Christmas
Prepare for a joyful holiday season without breaking the bank. TSB Bank’s guide reveals smart strategies for budgeting and celebrating Christmas stress-free.
Between presents, food, drinks, and festive treats, it's easy to lose control of your spending during Christmas. Bank of England data shows that the average British month household spends an extra £700 in December, around a third more than in a normal. However, getting a grip on your spending doesn't mean sacrificing the joy of the season. In fact, especially this year, when many of us are feeling uncertain about finances, taking control can help you relax and enjoy the festivities. In this guide, we share some budgeting and saving tips to help you shop and spend smarter this Christmas.
How to Budget for Christmas Without Overspending
The following tips will help you plan and stick to a Christmas budget, ensuring you enjoy the season without financial stress.
1. Plan Your Budget
The first step is to assess your finances and honestly determine what you can afford to spend after covering your essential outgoings. This involves looking at your overall financial situation and being realistic about what you can comfortably set aside for the holiday period.
A helpful way to ensure you re setting a manageable budget is by looking back on your spending from the previous year. Take a look at your Christmas expenses from last year - how much did you spend on gifts, food, decorations, and other festive activities?
Looking back at this information can help you see where you might have spent a bit more than you meant to, and where you could cut back if needed. It's also a great way to set a more realistic goal for the year, based on any changes to your money or plans.
Once you have a clear understanding of what you can spend, break down your budget into the key categories that make Christmas special - such as gifts, decorations, food, and drinks.
Savings pots are a great feature that many banks include in their mobile banking apps. They allow you to separate your money into different funds which could help you organise your Christmas budget.
By reviewing your past spending habits, you can avoid repeating mistakes, make more informed decisions, and prioritise what truly matters to you during the festive season.
2. Build the Budget Habit
It's one thing to know your budget, but sticking to it is essential. A lack of planning can lead to last-minute panic buying. Before you start shopping, make a detailed list of exactly what you need and who it's for. For example, plan your meals so you only buy the right amount of food and drink.
Learn how to manage money day-to-day and How to budget on an income.
3. Avoid Impulse Purchases
The number one enemy of a smart Christmas shopper is the impulse purchase. Whether you're browsing the high street or scrolling online, retailers are experts at tempting you to pick up things you never planned to buy.
Try and combat this by using the 24-hour test. If something isn't on your list or in your budget, give yourself 24 hours before making the purchase. This pause will help you decide whether it’s something you really need.
4. Watch Out for Hidden Costs
Do your research to ensure you get the best deal. Don’t assume that sales or special offers are always the lowest price. Also, keep in mind that a bargain only counts if it’s something you truly need.
When shopping online, remember to factor in delivery charges, as these can add a hidden hike to your total cost.
Creative Ways to Budget for Christmas Gifts
To cut down on gift expenses, try alternatives like Secret Santa or setting spending caps.
Think about thoughtful, low-cost alternatives, like handmade items, second-hand gifts, digital cards, or family activities. These ideas will make the season special without breaking the bank.
Stretch Your Savings Further
Take advantage of early shopping and supermarket savings schemes to save. Loyalty points, cashback rewards, and credit card rewards can also help stretch your savings. Look for sales alerts and cashback opportunities to make your budget go further. For more tips on saving, check out How to get started with saving and TSB Savings Accounts.*
Avoid Debt and Seasonal Scams
Avoid the temptation to borrow for Christmas or take out payday loans. Watch out for unregulated savings clubs or gift voucher schemes that may not be secure. Also, be wary of seasonal scams, especially fraudulent websites or social media ads promoting too-good-to-be-true deals. Protect yourself with the latest purchase fraud warnings for seasonal shoppers.
For more help, visit the Money Worries hub or Get in touch.
Remember What Really Matters
Christmas is about more than spending money - it’s about togetherness, making memories, and celebrating the season in meaningful ways. With a solid budget, you can enjoy all of those things without stress. Make it a Christmas to remember, focusing on what really matters most.
*You need to be 16+ and UK resident to open most of our savings accounts with the exception of Savings Pots and TSB ISAs.
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