The Salary Calculator

How to Make Your Money Go Further This Christmas

by Madaline Dunn

With Mariah Carey blasting from supermarket speakers, the distant jingle of bells, and cinnamon wafting in the air, Christmas is right around the corner. 

But, while the festive season is a time of celebration, it can often come with a hefty price tag. 

This year, around a third of Britons are worried about the financial impact of Christmas, with 43% of parents feeling pressured to overspend.

Christmas doesn’t have to break the bank, though. By keeping spending in check and getting creative, you can keep costs low and spirits high. This week at The Salary Calculator, we’ll show you how. 

Making a list, checking it twice

From Christmas trees and decorations to secret Santa and family get-togethers, on average, households spend around 29% more during the holidays. 

“Behavioural research shows that when we make financial choices under pressure or fatigue, we default to instinct”

According to a recent YouGov poll, a median of £300 goes on presents, £150 on food, and £50 on seasonal travel.

And that doesn’t take into account all of those little extras. 

“Christmas becomes expensive not just because of the big purchases but because of the dozens of small, unplanned decisions people underestimate,” said financial wellbeing expert Sarah McCalden.

That’s how spending can spiral. 

“Behavioural research shows that when we make financial choices under pressure or fatigue, we default to instinct rather than conscious planning, which is why overspending feels almost automatic in December,” McCalden added. 

McCalden advises starting by choosing your overall Christmas limit and dividing it into clear categories: gifts, food, travel, and social events. 

“This reduces decision fatigue and gives your brain a framework to follow and track your spending weekly throughout December,” she noted, explaining that most people underestimate their actual spending by up to half. 

Using a budgeting app can also help you track your spending and check whether you can cut anything out.

Second-hand gifting and homemade decorations 

Alongside putting a spending limit on purchases, shopping second-hand can be a great way to make your money go further.

With some items costing around a fifth of the retail price, charity shops are an avenue for affordable gift-giving, while giving back at the same time. 

Most charity shops have a dedicated kids section, so whether you’re on the hunt for an action figure, a children’s book or a monopoly set (although, maybe best skipped at Christmas), there are options for all ages. 

Last year, Oxfam found that a quarter of adults planned to buy second-hand gifts for children at Christmas.

To find more specific wish-list items, you can also grab a pre-loved bargain at an online second-hand marketplace like eBay, Depop, Facebook Marketplace or Vinted. 

And from baubles to stockings, this time of year, charity shops are overflowing with Christmas decorations at a fraction of the retail price. 

Or, you can make your own. 

Foraging for Christmassy foliage can be a fun activity to enjoy with friends and family that adds a festive touch to your home, entirely for free — whether that’s evergreen pine arranged on a table, fir leaves and berries for a homemade wreath or hanging branches.

If you fancy getting even more crafty, you could try making your own snow globes using old jars, collecting and painting pine cones, or crafting a wooden spoon angel.

The same goes for presents. Christmas biscuits, chocolate truffles and honeycomb all go down a treat, and can be made on a budget.

Budget-friendly feasts 

And while food costs are up this year, putting together a tasty Christmas dinner doesn’t have to cost the earth. 

Start by checking out supermarket comparison websites to find where you can make the biggest savings. 

According to a recent Which? analysis in November, Aldi won the crown for the cheapest supermarket, with 70 items costing £121.22 on average. 

Waitrose (£166.79), Ocado (£154.37) and Sainsbury’s (£141.62) were comparatively the most expensive.

But, by shopping at some supermarkets, you can keep the cost of Christmas lunch as low as £11.93 for four. 

It’s worth noting that store loyalty cards can help you bring down your supermarket spend, too, and this year, some offer customers Christmas rewards and freebies as well.

Yellow stickers can also be great for last-minute deals, while the Too Good to Go app can help you find low-cost food from supermarkets, cafes and restaurants. And from bubbly to Christmassy confectionery, own-brand alternatives can save you a pretty penny.

If family and friends are coming over for grub, asking them to bring a side dish or take on trifle duty can also lighten the load.

Any leftovers from Christmas day can be whipped up into sandwiches, soups, stews or even a re-roast — the rest can be frozen.

Avoid spending what you can’t afford

With Black Friday deals and Buy Now, Pay Later options at checkout, it might be tempting to go beyond your budget or delay payment, especially when one in four people who celebrate Christmas can’t afford to set money aside. 

“Christmas should be about joy, not debt”

However, charities urge caution when it comes to Christmas credit. 

This year, debt charity StepChange research found that for more than two in five borrowing, it will take more than six months to repay the credit they use this Christmas. For nearly one in five, it’ll take more than a year. 

“Christmas should be about joy, not debt – but we know the pressure to spend can feel overwhelming,” said Grace Brownfield, Head of Influencing and Communications at National Debtline, who advised talking openly with friends and family about what you can actually afford. 

“Honesty can ease the pressure and avoid misunderstandings,” she noted. “Most importantly, avoid borrowing for presents; the short-term excitement isn’t worth months of stress.”

And you don’t have to spend money to have fun. This year, swap Santa’s Grotto and the ice skating rink for some Elf on the Shelf magic or a scavenger hunt. Have a stroll to check out the festive lights, get stuck into a Christmas movie marathon and check out free local events in your area across the Christmas period. 

And, if money worries are stacking up, know you’re not alone. 

Brownfield recommends reaching out for help as soon as possible. National Debtline offers free, confidential help at 0808 808 4000.

Tags: budget, christmas, savings, spending