4 Effective Ways To Prepare Your Finances For Christmas

The end of the year is often the most expensive period for a lot of us, especially if you’re celebrating over the holiday season. Between the extra food and drink you buy, and presents for family and friends, it’s easy to get carried away in all the excitement and spend more than you initially planned.

In 2023, the Independent reported that the average British family would spend £1,811.70 on Christmas. That’s an increase of 290% compared with 30 years ago, even with adjustments for inflation.¹

Naturally you want to ensure you and your loved ones enjoy your dream Christmas, but this additional spending can present a significant outgoing and could even make it more difficult to work towards your long-term financial goals.

Planning ahead may make it easier to manage the extra costs; read on to learn four ways to prepare your finances for Christmas.

1. Create a detailed Christmas budget

Budgeting is even more  important around Christmas as it gives you more control over what you spend. Most households will increase their spending in the lead up to Christmas, and as the cost of living rises, the festivities might be more expensive than previous years.

Apparently, the average Brit is planning to spend £362 on gifts this year (an increase of 10% on last year) and £317 on food and drink (an increase of 60%).²

Increasing your outgoings at Christmas may be necessary if you want to enjoy the holiday with your family, but it’s important that you set a budget to make sure you don’t overspend significantly.

To do this, you could create a detailed list of all the extra expenses you need to cover over the festive period.

This might include:

• Presents
• Food and drink
• Travel costs if you’re visiting friends and family
• Eating out and other social events over Christmas.

By writing a separate Christmas budget, you can determine roughly what your dream celebration will cost. Sticking to your budget could help you  manage your spending more effectively and resist the temptation to go overboard on items you don’t need.

Ultimately, this could mean that you can pay for the Christmas you want while also continuing to contribute to savings and investments for the future, as you normally would.

2. Start shopping as soon as possible

Doing your Christmas shopping early could make the whole process less stressful, and it might help financially too.

If you start early, you could spread the cost of Christmas over several months, and you’ll have more time to shop around and find the best deals. As a result, you might be able to reduce the overall cost of purchasing presents.

This could leave you with more disposable income to dedicate to savings and investments, contributing to your plans for the future.

Having said that, if you’re shopping around and buying presents from unfamiliar websites, it’s important that you take steps to avoid scams. To shop safely, look for reviews of the company and check for the small padlock symbol in the address bar that shows the website is secure. And read our article for more ways to protect yourself from scams.

It may also be worth using a credit card to make online purchases, as  many offer  more consumer protection.

3. Increase contributions to your savings and investments before Christmas

Even if you plan well, the festive season brings a lot of extra expenses that can be hard to fit into your budget. You might be tempted to use contributions you’d normally make to your savings to cover these costs.

If you want to continue working towards your savings goals, consider increasing your contributions in the months leading up to Christmas. This may mean that you’re able to spend more over the festive period without disrupting your progress toward long-term financial goals.

And if you do feel more financial pressure than you’re expecting over the Christmas period, you have more savings to fall back on if you need them.

4. Get a head start on next year

After the festivities are over, you likely won’t want to think about doing it all again next year. But getting a head start could make it easier to manage your finances next Christmas.

Now that you’ve worked out a clear Christmas budget, you know roughly what you might spend. You could consider starting a Christmas fund and adding a small amount each month.

That way, when the festive season comes around again, you can cover the associated expenses without changing your regular budget. As a result, you can make your normal contributions to savings and investments and continue working towards your financial goals.

And the best trick in the book is to make the most of January sales – if you’re feeling really organised you can get a head start on next year’s presents, tableware, crackers and more!

Get in touch

Heidi Tresadern is Wealth Planning Director at Benchmark Financial Planning, Maidstone. Heidi has over 30 years’ experience and supports all needs from starting out and building wealth, to wealth preservation for future generations and use of assets to fund long term care.

Please visit our contact page to speak with Heidi and the team.

Important information

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Benchmark Financial Planning is not responsible for the accuracy of the information contained within linked sites.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Benchmark Financial Planning Limited is an Appointed Representative of Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority, the registration number is 223112. Registered company: 07572431.

Approved by Best Practice IFA Group Limited 08/11/2024

The end of the year is often the most expensive period for a lot of us, especially if you’re celebrating over the holiday season. Between the extra food and drink you buy, and presents for family and friends, it’s easy to get carried away in all the excitement and spend more than you initially planned.

In 2023, the Independent reported that the average British family would spend £1,811.70 on Christmas. That’s an increase of 290% compared with 30 years ago, even with adjustments for inflation.¹

Naturally you want to ensure you and your loved ones enjoy your dream Christmas, but this additional spending can present a significant outgoing and could even make it more difficult to work towards your long-term financial goals.

Planning ahead may make it easier to manage the extra costs; read on to learn four ways to prepare your finances for Christmas.

1. Create a detailed Christmas budget

Budgeting is even more  important around Christmas as it gives you more control over what you spend. Most households will increase their spending in the lead up to Christmas, and as the cost of living rises, the festivities might be more expensive than previous years.

Apparently, the average Brit is planning to spend £362 on gifts this year (an increase of 10% on last year) and £317 on food and drink (an increase of 60%).²

Increasing your outgoings at Christmas may be necessary if you want to enjoy the holiday with your family, but it’s important that you set a budget to make sure you don’t overspend significantly.

To do this, you could create a detailed list of all the extra expenses you need to cover over the festive period.

This might include:

• Presents
• Food and drink
• Travel costs if you’re visiting friends and family
• Eating out and other social events over Christmas.

By writing a separate Christmas budget, you can determine roughly what your dream celebration will cost. Sticking to your budget could help you  manage your spending more effectively and resist the temptation to go overboard on items you don’t need.

Ultimately, this could mean that you can pay for the Christmas you want while also continuing to contribute to savings and investments for the future, as you normally would.

2. Start shopping as soon as possible

Doing your Christmas shopping early could make the whole process less stressful, and it might help financially too.

If you start early, you could spread the cost of Christmas over several months, and you’ll have more time to shop around and find the best deals. As a result, you might be able to reduce the overall cost of purchasing presents.

This could leave you with more disposable income to dedicate to savings and investments, contributing to your plans for the future.

Having said that, if you’re shopping around and buying presents from unfamiliar websites, it’s important that you take steps to avoid scams. To shop safely, look for reviews of the company and check for the small padlock symbol in the address bar that shows the website is secure. And read our article for more ways to protect yourself from scams.

It may also be worth using a credit card to make online purchases, as  many offer  more consumer protection.

3. Increase contributions to your savings and investments before Christmas

Even if you plan well, the festive season brings a lot of extra expenses that can be hard to fit into your budget. You might be tempted to use contributions you’d normally make to your savings to cover these costs.

If you want to continue working towards your savings goals, consider increasing your contributions in the months leading up to Christmas. This may mean that you’re able to spend more over the festive period without disrupting your progress toward long-term financial goals.

And if you do feel more financial pressure than you’re expecting over the Christmas period, you have more savings to fall back on if you need them.

4. Get a head start on next year

After the festivities are over, you likely won’t want to think about doing it all again next year. But getting a head start could make it easier to manage your finances next Christmas.

Now that you’ve worked out a clear Christmas budget, you know roughly what you might spend. You could consider starting a Christmas fund and adding a small amount each month.

That way, when the festive season comes around again, you can cover the associated expenses without changing your regular budget. As a result, you can make your normal contributions to savings and investments and continue working towards your financial goals.

And the best trick in the book is to make the most of January sales – if you’re feeling really organised you can get a head start on next year’s presents, tableware, crackers and more!

Get in touch

If you need help planning for the festive period or your other financial goals, book an appointment with your adviser today.

Alternatively, if you’re yet to connect with an adviser, please visit our contact page to find your nearest office.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Benchmark Financial Planning is not responsible for the accuracy of the information contained within linked sites.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

[1] 21.10.2024 UK families to spend over £1,800 this Christmas as costs triple in last 30 years The Independent

[2] 22.10.2024 UK consumers plan Christmas spending increase, research shows Talking Retail