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How to create a Christmas budget

With the countdown to Christmas in full swing, getting yourself organised for the festive season is important.

According to, the average person spends over £512 on Christmas in the UK. However, 60% of people are trying to cut down on their costs and just over 20% of people are having to take a loan to fund their Christmas shopping.1

To help prevent overspending, you may want to plan a Christmas budget. This way you can make sure the necessities are covered and hopefully reduce any stress.

Here are some tips to get started.

1. Look at what you can afford to spend

Before you start stocking up on Christmas essentials, take time to review your finances. Looking at your outgoings vs your incomings can help you see how much you have spare for food and gifts. You may also be able to see areas where you could cut back on your spending for the holiday period.

Explore more: How to create a budget

2. Make a list of what you need

Deciding what you need can be a useful way to make sure the essentials aren’t forgotten. You could even split everything into categories, such as:

  • food
  • gifts
  • wrapping paper
  • activities
  • days out

Then assign a spending limit to each category. You could try breaking this down even further – by meal or recipient of gift, for example.

It can also be useful to prioritise your list so the most important items are bought before your budget runs out. If you have any leftover money, you could save it for Christmas next year.

3. Look at ways you can cover the cost

If you’re not going to be able to cover the cost with remaining pay cheques, you may need to dip into savings or borrow.

Dipping into any savings you have will mean you won’t need to borrow money. You can then set out a plan to rebuild your savings next year. But only use your savings if you feel comfortable doing so. It’s important to check the terms of your savings account too, as you may lose interest if you access your savings pot early.

If you don’t have enough money available, you may have to borrow. Using a credit card may help cover the initial outlay, but anything you borrow must be paid back and you may have to pay interest. 

4. Start your shopping early

Starting your shopping early can give you a better chance of finding all your gifts for the price you’ve budgeted for. Leaving things until the last minute could mean you’re stuck scrambling for presents and have to spend more than you’d want to.

Plus, starting early can help you spread the cost of gifts and other bits over a few pay cheques – if that’s what you’ve planned for in your budget.  

5. Look out for sales and offers

Some retailers have sales in the run up to Christmas Day, or have offers on bulk buying gifts. It pays to take some time to see what offers are on, especially if you’re planning to buy from specific shops. You may be able to bag yourself a bargain and save a little in your budget to be used on something else.

It’s also useful to look at food offers in the lead up to Christmas Day. Are there items you could buy now and freeze? Or, can you place a Christmas food order so you know exactly how much you’re going to spend on the day?

6. Plan for next year

It’s never too early to start planning for next year’s Christmas and you could use the budget you’ve set out this year as a guide. Saving things like wrapping paper and gift bags to use next year can help you cut down on some costs. 

You may want to open a savings account and add a little each month to help cover the cost.

Explore more: How to save money

What next?

Taking time to plan for Christmas can help you stay on top of your spending and avoid a New Year debt hangover.    

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