How to cut the cost of Christmas
This is shaping up to be the year of the cut price Christmas.
Brits are expected to spend an average of £569 on the festivities this year — less than the £576 spent last year, and way behind the £627 back in 2020, when lockdown saving were plentiful, according to figures from Hargreaves Lansdown.
Keeping the cost down is going to be a big ask, given how inflation has made every aspect of the big day more expensive. It means we’re having to make our Christmas spending work much harder.
Just under half of people said they wanted to cut the cost this year, here are some top tips on how to save on Christmas.
Buy fewer gifts
The most common approach is to buy gifts for fewer people. This is a great way to slash the cost, but you need to be careful, and explain your plans to your friends and family as soon as possible.
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If you get in before anyone has done any shopping, you can give everyone a chance to save. If you wait to the last-minute – or don’t say anything at all — they may end up buying for you, and feeling let down not to get anything in return.
Shop around
Another popular way to save is shopping around. This is so much easier of you’re one of the 9% of people who plan to save by switching from the high street to online shopping.
If you start now, you can also take advantage of bargains as they appear — including Black Friday.
Socialise less
If you take this approach — or you’re one of the 7% who plan to have fewer people over on the day — it’s important to make this clear well in advance. Otherwise, your loved ones could take it personally — which could make for some grim festive rows.
Start early
You should have at least a couple of paydays before Christmas, so this is your chance to put aside anything you can afford to help cover the cost.
At the same time, if you establish a budget now, and consider what you need to buy, you can tell at the outset whether it’s realistic.
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That gives you the opportunity to consider whether you can stay within your budget by shopping around, or whether you need to make more drastic cuts.
If you absolutely can’t get through the period without borrowing, it also gives you time to find the most cost-effective way to borrow, rather than panicking and sticking it all on plastic.
What if you can't cut the cost?
Unfortunately, even with the best of intentions, some people will end up spending more than they’d like.
Worryingly, those who can correctly calculate the impact of inflation were actually more likely to say they will be spending more than they did last year, according to a survey by Hargreaves Lansdown.
It means that for a lot of people, their plans for a cut-price Christmas could fall apart when they realise how much everything costs this year.
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It’s going to be harder to stretch to the extra costs, which is why only half of us expect to fund at least some of it out of spare income.
A third of us can use our savings, but a lot of people will end up borrowing. The proportion expecting to use a credit card is up from 15% last year to 18% this year and those expecting to borrow from friends and family is up from 3% to 5%.
If you’re worried that you may end up going into the red, it’s not too late to start saving and planning now.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown and co-presents Switch Your Money On podcast.
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