How to budget for Christmas

7 min Read Published: 15 Oct 2020

how to budget for christmas

In this article I provide some quick tips on how you can budget for Christmas. Some of the tips that I share can also be used when budgeting for any big purchase, such as a holiday or house deposit.

Tip 1 - Set a budget

You need to work out who you're buying for and what you're spending your money on each year. Write down every person you need to buy a present for and roughly how much you would like to spend on them and total this up. It makes sense to set aside money for decorations, a Christmas Tree (if you buy a real one each year) and even wrapping paper and sellotape. Remember, if you host a big Christmas dinner, then you need to account for this in your Christmas budget too, including food and any drink that you will need. If you need help organising your money into a budget you may find our article "The best budgeting apps in the UK" useful.

Example Christmas Budget list:

Child A - £50

Child B - £50

Child C - £50

Other Family members - £100

Friends - £50

Decorations - £25

Wrapping Paper & Cards etc - £25

Christmas Tree - £50

Food and Drink - £100

Total =  £500

Tip 2 - Take advantage of discounts and offers

If you are clever and take advantage of discounts and offers then you can make your budget go further. If, for example, you have a budget of £25 for a present and an item had been reduced from £25 to £20 you have a couple of choices. You can reduce your overall budget meaning you save money overall, or you can account for that saving in your budgets and get more for your money. For example, you could buy another gift for £5 so that you have gifts up to the value of £30 whilst sticking to your original £25 budget.

Tip 3 - Start saving now

Don't wait to start saving, the earlier you start saving the easier it will be to reach your targeted budget goal. Ideally, you should start budgeting for Christmas straight after Christmas is over, for example, I start budgeting for Christmas in the following January. As you have already worked out your total budget, all you need to do is divide that by 12, meaning if you have a budget of £500, you need to be putting approximately £42 a month aside. In fact, you may want to consider dividing it by 11 so that you have achieved your goal by December, meaning you'll have a bit more money should you have any social arrangements around Christmas time.

Tip 4 - Find somewhere safe to put your money and don't touch it

Putting money in a jar can be a great way to save but it can be tempting having the money within arms reach each day. Consider putting the money away into a separate account where it is safe and less tempting to access. Digital app-only banks such as Starling and Monzo make it easy to save by allowing you to move money into savings 'pots' at the touch of a button. You can set goals and even customise the picture to help you focus on your goals.

Tip 5 - Treat your Christmas budget as a bill

A good tip to help you stay on track with budgeting for Christmas is to treat it as a bill. If you need to put away £50 a month to ensure you meet your Christmas budget goal then treat it the same as paying your mortgage or electricity bill. You wouldn't spend the money intended to go towards your mortgage on a night out with friends, so the same rule should apply to your Christmas savings. You could consider setting up a standing order so that the money automatically moves across on payday, that way, you don't even have to remember to do it.

Tip 6 - Use cashback sites

Check out cashback sites such as Quidco and Top Cashback and see if the item that you intend to purchase is available to buy through the site. Cashback sites either offer a percentage back as cashback (usually 1% to 25%) or sometimes you can earn specific cash amounts for purchasing specific items. Clicking on the link and buying through the site will ensure that you earn money back which helps to reduce your overall spend. Be aware that cashback sites can sometimes take a few months to credit the cashback and there may be better offers available if you buy elsewhere.

Tip 7 - Shop around

There are a lot of sites that allow you to compare prices such as PriceRunner and Kelkoo, so make sure you do your research before you buy. Also, look to see if any voucher codes are available and consider downloading a Google Chrome extension such as Honey that will search for discount codes and apply them when you go to checkout online.

Tip 8 - Get creative

Remember, not everything has to cost a lot of money. Often, the best presents are those that show thought and love and so get creative and see if you can create something homemade, perhaps from old photo's or even writing a poem. There is good inspiration for handmade gifts on sites such as Pinterest.



Looking for a financial adviser near you?

Do you need financial advice? An independent financial adviser can show you how to make the most
of your money. Find your nearest qualified and regulated adviser using this VouchedFor search tool.