The pressure to spend, spend, spend at Christmas is more stressful than many of us would like to admit.
Almost half of Britons say they expect this festive season to be their most expensive yet, with an average anticipated spend of £309, according to Nationwide data.
Plus, a large proportion of us feel pressured to spend beyond our means to meet expectations (a huge 63 per cent of Generation Z, and 60 per cent of millennials).
If you don’t want to be feeling the squeeze come January, we’ve put together some tips on how to budget without breaking the bank.
Work out how much you can afford
It sounds simple, but perhaps the most important thing to do is review how much you have to spend.
This means looking at your outgoings and income, plus any savings you may have already set aside for Christmas.
If you need some help, you can find budget planning tools online by the likes of HSBC, Starling Bank and Money Helper.
Tamara Harel-Cohen, financial well-being expert and co-founder of financial well-being app RiseUp, says you may want to cut down on some of your monthly variable expenses in the run-up to Christmas.
This might include ditching the takeaways, or she says: “It’s not too late to slash those sneaky monthly subscriptions” before they renew next month.
Rajan Lakhani, a personal finance expert at Plum, also recommends looking at your spending from last Christmas and using this as a benchmark.
“Your money management or banking app should be able to give you this information in just a few taps and it may well even show you how you split your spending between different items last year,” he tells i.
“Once you’ve analysed your spending from last year, you can adjust the total amount based on whether you want to spend more or less this year.”
You may then want to split your budget into categories, such as gifts, food, wrapping paper, decorations and activities.
Bag a bargain
If you usually leave your gift buying until 23 December, you’ll probably be unsurprised to learn that you’re likely not getting the best deals.
You might want to search through the Black Friday sales, which are continuing in many shops this weekend and could help you get a great discount.
The most organised among us might even try this year’s Boxing Day sales for 2025 Christmas gifts.
Outlet shops can also be a great source of bargains. Some of these are physical stores, but plenty of high street and high-end shops have their own outlet websites or an outlet store on eBay.
Lakhani says you should go into sales with a clear idea in your head of what you want to avoid being tempted by an item you don’t really need or that might be over budget.
He says if you have certain presents in mind already, you can set up alerts for some retailers to help you get the best price.
“Another thing to watch out for is fake discounts where the retailer sets the price too high to begin with before discounting it to a normal price,” he says.
“You can make sure you don’t fall into this trap by price matching items with sites like PriceSpy [a price comparison site] to ensure you’re getting a good deal.”
You could also cut costs by buying second-hand, such as through Vinted, Depop, eBay, charity shops or car boot sales.
Another option is to get creative and make thoughtful gifts for your loved ones (that is, if you trust your artistic skills!).
Amber Lovell, 30, from Bournemouth, says she likes to crochet gifts with yarn salvaged from charity shops.
“People are less inclined to throw something away that people have spent time and love making for them,” she says.
Talk to your loved ones
If you’re able to have an open and honest conversation with your family and friends about how much you’re able to spend, it can take off some of the pressure.
This could mean setting a spending limit per person, agreeing not to buy any gifts, organising a Secret Santa, or just asking for a small charity donation instead.
Lakhani says: “It may feel a little awkward to broach the subject, but put yourself in their shoes – would you want someone you love to be feeling anxious about their finances, or put themselves in financial trouble over a few gifts?”
Be careful with borrowing
Ideally it’s best to use a Christmas fund or your existing budget – or you may choose to forgo gifts if you can’t afford it – but some people will inevitably turn to borrowing.
You may want to use a credit card, but make sure to only spend what you can afford to repay and make a plan to pay off anything you borrow as soon as you can.
If you don’t pay your credit card balance in full each month, you may be charged interest.
Some people may also turn to Buy Now Pay Later services – but Victoria Harris, founder of The Curve – a financial education platform and investment club, warns people to be aware of the downsides.
“The ease of spreading payments can make it tempting to overspend – £20 split into four payments might seem manageable, but multiply that across several purchases and you’re looking at significant outgoings in January when most people’s finances are already stretched,” she says.
“My advice? If you’re using BNPL, keep a running total of all your committed future payments in your phone’s notes,” she adds.
Sell what you don’t need
You could boost your Christmas fund by selling bits and pieces you don’t need any more.
Websites like Vinted, Depop, Facebook Marketplace and eBay are all great options.
Journalist Bianca Barratt, 35, says she sets herself a challenge every year to sell items on reselling apps in the run-up to Christmas.
“All the money goes into a pot that I use for Christmas presents. It’s like ‘free’ money that I worked hard for, and it helps take the pressure off during the holiday season,” she says.
How we save for Christmas
Emma Thomas, 52, doesn’t spend lots on the festive season and instead sees it as a chance to “slow down and get cosy” with her husband and two children.
The family set aside a savings pot in their Monzo account specifically for Christmas and birthdays, putting £70 in each month and only withdrawing the money when needed.
Thomas, who runs Managing the Menopause, says this makes it “so easy” and means they can see at a glance how much they have in their fund.
Emma Thomas sees Christmas as a chance to ‘slow down’ (Photo: Jenny Smith Photography)
Eamonn Turley, 64, has a unique system he calls the “reverse Christmas budget”.
Every year on Boxing Day, he takes photos of the receipts of all his major Christmas expenditures and saves them in a specific folder.
Turley, who runs insurance comparison site Multi Quote Time, says he uses this as a baseline for his Christmas budget the following year – and managed to shave £300 off last year’s holiday spending.
For Emma Thomson, 35, the most important thing is that she can pay her bills – even if it means cutting down on spending.
She starts saving for Christmas in September and begins sending a set amount to a separate bank account every month.
Thomson, from Essex, says she will save any money that is left over at the end of each month and tends to “over plan”.
Emma Thomson starts saving for Christmas in September
