We need to talk about Christmas

An average household in the UK spends £740 more in DecemberOpens in a new window than any other month of the year, not just on presents but also on food and drink.

The pandemic hit our finances hard, with thousands of business and job losses and huge numbers of people claiming benefits, such as Universal Credit, for the very first time. This year, the rising cost of living has added even more pressure on households to reduce their holiday spending.

That’s why, more than ever, we need to talk to our friends and family about the cost of Christmas, Hanukkah or whatever else you’re celebrating.

Pressure to please loved ones and to give children the perfect Christmas tops the list of reasons people overspend during the festive season.

When you’ve worked out how much you can afford to spend on presents, talk to the people you plan to give gifts to about how much you plan to spend.

This might be embarrassing. In our survey, three-quarters of the UK told us they'd be happy talking about the total cost of presents with their partner, but just a third would be comfortable talking to their mum, friends, siblings or children and just a quarter with their dad. 

It might help to remember that many people will be struggling this Christmas. If you’re spending too much on presents for loved ones, they might feel the pressure to spend the same amount on you, even if they can’t afford to.

You might feel stressed about the idea of having a difficult conversation about money, and you may forget the important things you wanted to bring up. So, follow our tips on How to have a conversation about money.

You’ll feel better when you’ve had the conversation. With that out of the way, here’s some more tips to make sure any festive fun you have this year doesn’t affect your financial future.

If you’re not sure of your plans for the festive season yet, it could make budgeting hard. Planning and budgeting can help you feel more in control of your holiday spending and make January’s bills more manageable.

To begin your budget, make a list of family and friends you will be buying presents for and allocate an amount for each person. If money is tight, it might be worth agreeing with your friends and family ahead of time not to exchange gifts.

This year especially, loved ones are likely to understand and would rather exchange cards than see you struggle financially.

If you are hosting dinner, consider how many people will be coming over and how much you will need to spend on food and drink. If money is tight, perhaps you could ask guests to bring a dish. We also have many tips on How to cut the cost of Christmas dinner.

Once you have your budget, it’s important to stick to it. This might mean talking to your friends and family so they have the same budget expectations as you.

A quarter of people in the UK worry about going into debt over Christmas. It might seem easy now to pay for presents on your credit card or even take out a short-term loan.

But paying back the debt could be expensive, and if you miss payments there’ll be a negative impact on your credit report – which could affect your future ability to get any type of debt at all.

If you can, try and set aside a small amount of money each month, just for your Christmas spending. Read our tips to saving for Christmas.

If you’re struggling with money, you can talk to someone today, for free and in confidence, online or by phone. We have specially trained advisers who can help you start sorting out your financial problems.

Use our free guide to help you decide whether you should be borrowing money.

It might sound corny but it really is the thought that counts. Cheap or even free doesn’t mean thought hasn’t gone into something.

Start planning for Christmas as early as possible. In the January sales buy Christmas essentials such as decorations and wrapping paper at discounted prices.

If you know what gifts you need to buy, it can help to pick up an item a month to help spread the cost and save you the hassle of shopping when everyone else is.

And don’t be afraid to hunt on eBay or in charity shops for good-as-new second-hand gifts. If you can bake or craft, a handmade gift is thoughtful and needn’t be expensive.

And if you want to hold onto that Christmas magic, MoneySavingExpert has a list of free or cheap tipsOpens in a new window

One of the effects of the past few years’ uncertainty has been to make it normal to feel, on occasion, that everything is too much.

But if you’re often feeling low it could be a sign of poor mental wellbeing. Feeling down can make it tough to manage money. And worrying about it can make you feel even worse.

If you can, take five minutes to read our guide Money problems and your mental wellbeing.

If your worries are related to your financial independence, this might be a sign of financial abuse. There’s support for you. Read more in our guide Financial abuse: spotting the signs and leaving safely.