How to master your Christmas budget

Christmas doesn’t come cheap. A 2021 poll by YouGov showed that Brits’ festive costs were likely to add up to £1,108, on average. 

While you don’t need to spend anything near that much, it can still be hard to keep costs low with the temptation of festive treats, activities and wanting to indulge your loved ones.

It’s important to start by working out how much you can afford to spend this Christmas, and then prioritise how you want to spend it. 

You might already have an idea of how much money you have spare, once you’ve accounted for bills, living costs and debt repayments. Or it might help to use an online budgeting tool, such as this one from MoneySavingExpert.

Once you have a fixed budget in mind, then you can start to think about what's really important to you this year. You’re likely to have three main priorities for your budget: presents, decorations and food. 

Budgeting how much to spend on food and drink is probably a good place to start as you will be able to make a pretty accurate estimation of how much you’ll need to spend. 

First work out how many people will be eating in your home, and when, and this will help to work out how much you will need to spend on food and drink. You can keep it to a minimum through some careful meal planning and avoiding waste. Additional tips to save on your food budget include:

• Buy all-in-one Christmas dinners: for example, Asda’s frozen Christmas dinner bundle is £18.78 for eight people.
• Make the most out of your freezer: buying frozen fruit and vegetables can often be cheaper and just as healthy as buying fresh. Also, be sure to freeze any leftovers so they don’t go to waste.
• Share with neighbours: food sharing app Olio connects neighbours to give away unwanted food and other items that may otherwise end up in landfill.

Do you need any new decorations, or can you get by on what you’ve already got? For most of us, that’s probably the case. 

Your biggest expense is likely to be a tree. But there are some bargains out there. Try stores such as Aldi and Argos which have low-cost trees. Or shop online, and when you do, use a price comparison site such as Google Shopping to find a large selection for under £20. 

Fairy lights can also be a drain on your budget, at a time when energy costs so much. But you can cut your bills by opting for energy efficient LED fairy lights; it can cost from just £0.26 to £0.90 to run LED lights for a whole Christmas, according to Checkatrade. For some outdoor sparkle, buy solar-powered lights so the sun takes care of your energy needs.

Once you’ve budgeted for food and decorations (and potentially any extra expenses, like travel), then you should have a fairly good idea of how much you have left for 
presents. 

Your next step is to create a list of the names of family and friends you will be buying presents for. Once you’ve done it, see how you can shorten it. If you speak to the people you love, they’re likely to understand if you need to cut back on gift-giving this year. And as for the others, like school teachers or distant cousins, send a personal message in a card instead.  

Then allocate an amount for each person. Once you have a list, track it very closely, noting down how much you’ve spent on whom and tallying your overall spend. You can make small adjustments as you go, for example if you find a bargain for someone, you might have a bit left for someone else on the list. 

Using this list should help you avoid buying on impulse or getting dragged into tempting deals in the shops, making sure that you buy purposefully.

There are also plenty of other ways to save money on presents. Read our guide to avoiding debt and stress when Christmas shopping.

Once you’ve budgeted for food, presents and any travel, you’re pretty much there. Many other traditions can be cast aside, without anyone really noticing! For example...

• Sending cards ✘ (it’s fairly old-fashioned - try an e-card instead)
• Excessive, overblown festive feasts ✘ (it may be traditional to go OTT at Christmas, but drop it in 2022, a year when sustainability is at the forefront of many people’s minds)
• Overdoing it with the outdoor lights ✘ (stringing up lights outside looks nice, but feel free to leave it to the neighbours)
• Matching pyjamas ✘ (you can probably live without them, or just reuse last year’s)
• Christmas-inspired coffee shop drinks ✘ (while the novelty is enticing, they cost a small fortune and are unhealthy - Cafè Nero's Mint Choc Chip hot chocolate has been revealed to contain equivalent to a whopping 15 teaspoons of sugar)
• Elf on the Shelf ✘ (not an essential Christmas tradition!)
• Mince pies, Christmas pudding and other traditional foods ✘ (if you like them, then by all means indulge, but don’t buy them solely because they’re traditional and you think you should)

This is a suggestion from Martin Lewis of Money Saving Expert and it’s admittedly controversial and not for everyone: he asks users of his site to imagine hitting a big red CANCEL CHRISTMAS button, to relieve themselves of the festive financial burden. 

He wrote in his 2018 Christmas Cold Turkey blog: "If you're really struggling and have nothing, then do truly go cold turkey – see family, spend quality time, think about life, watch the telly, but don't spend money on it. Christmas is just one day. Far more important is a happier, financially less-stressed New Year."

If this would relieve you of a huge amount of financial stress, perhaps it’s worth considering?