How to save money at Christmas

Christmas is one of the key times of the year when we like to splash out. Whether it’s getting in a few luxuries to eat and drink, making sure we celebrate with family and friends or showing our love with gifts, big money can easily be spent.

The desire to do the same will be strong this year, but the circumstances will mean that might not be possible.

For a start, everything, from presents to travel to food, will be more expensive than usual thanks to ever-increasing inflation. Add to this higher costs and bills which may dramatically reduce the budget you have available.

Essentially, you’ll have less spare money and your money will buy you less. So you’ll be faced with a choice: spend more or prepare for a pared-back celebration.

It might be that you can afford to get your usual Christmas, or close to it, without racking up debts. But if you don’t have the cash, or you feel that money would be better spent elsewhere, then the next month is going to be key.

These tips should help you to get as close to a perfect Christmas as you can on your budget.

Bear in mind that your outgoings will likely increase in January when energy bills go up again when you are working out your Christmas budget

This is an important first step every Christmas, but especially this year. Take a look at what you’ve got available to spend, or what you are likely to be able to add to your funds from the next few pay cheques.

When working this out, don’t forget to factor in whether you’ll need to also save a little bit more for other costs. Energy bills are set to go up again in January, and that’ll have an impact on spending elsewhere too.

You probably won’t be able to do everything you usually do, so work out what’s most important. Is it all about gifts for the kids and grandkids? Or will the bulk of your money have to go on trains so you can be with your family?

From this you can start to break down your available Christmas money into a spending plan. Split it out based on what you think those priorities require, then work out if other things will have to be ditched, or if you’ll need to steal money from one area to fund another.

Don’t just pop to the shops and see if you spot anything suitable as a gift. You’ll end up overspending. First you need to set a budget for each person and shop within that. It will help to let the person know your budget when you ask them what they want.

Once you’ve found something you want to buy, shop around to see if you can get it for less. Price trackers such as PriceSpy and Idealo can notify you when there are sales and offers, while buying things online at the same time can save you on delivery costs too.

Do the same for your food and drink shopping. A plan and list will prevent you buying more than you need. Opt for cheaper brands or special offers to make things more affordable.

Earning as you spend with cash back incentives can give your finances a little extra cushioning next year 

Use cash back cards and websites so that you get a little back on all your spending. The money might not be in your account to help with Christmas this year, but you’ll have a little extra to ease the strain next year.

If you can’t afford the Christmas you want, you could look at making changes that mix things up a little, rather than do a budget version of how you’d normally go about things.

You could introduce a one gift maximum, or set individual present price caps. Perhaps go further and give your time and skills, on anything from babysitting to DIY.

This works elsewhere too. Rather than a traditional meal, does it have to be turkey? Or even a roast? You could choose to send email Christmas cards rather than physical ones in the post.

I wouldn’t do this for absolute essentials, but if there are things you can give or take, buying them right before Christmas might mean you can pick them up in the sales.

This is particularly good for decorations and festive food, though it can work for gifts too.

Have an honest conversation with your loved ones about what you can and can't afford this Christmas

If costs will force you to make changes to your traditional celebrations, it’s well worth discussing that with others involved. That way, you’ll be able to manage their expectations.

This kind of chat could also come as a relief to friends or family members who are equally worried about their own spending at this time. It could take the pressure off them if you tell them that it’s OK if they don’t buy you a present, and it’s a chance to make cheaper plans together.

It might be tempting to use services like Buy Now, Pay Later so you can spend a little more now and deal with it next month.

Be careful here that you don’t overextend yourself. You’ll still need to pay the money back, and it’ll just mean things are a lot tighter in the new year.

And if other costs grow, you might not have the available cash to cover these delayed payments. It’s best avoided and sticking to what you can afford now.

If you’re fortunate to have enough money to weather the cost of living crisis, do consider if you can do anything to help those who will barely be keeping their heads about the rising water.

Food banks are always in particular need at Christmas time, and this year things will be much worse as people struggling to cover their owns costs are less likely to donate supplies.

Most supermarkets have drop off points where you can leave food, or you can check the Trussell Trust website to find details of your local food banks.

Ideally, try to provide essential foods that don’t require much energy to cook or heat.

Read more: How to properly budget for Christmas

Read more: Beat the festive finance hangover

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