Christmas on a budget: top tips, statistics & alternatives

It’s nearly time to put up the tree and open the sherry – Christmas is creeping closer day by day. But is this time of good cheer making you feel stressed about your bank balance?

Unlike Santa, you don’t have to get into the red this Christmas. That's why we've put together our top money saving tips and advice for celebrating the festive holidays on a budget.

In the UK, the average spend on Christmas in 2022 was £642, down slightly from £670 in 2021, according to YouGov.

According to the Bank of England in 2020, households spend on average £740 more in December compared to other months, which is a 29% increase from a usual monthly spend.  

So how do you do Christmas 2023 on a budget? You don’t need a frugal Christmas budget to enjoy the festive season without going into your overdraft, but it does help to plan your finances. 

Save ahead, make a plan and make sure you have access to the money you need. 

Here are some top tips to help you shop smart and save money this Christmas.

Plan ahead before you hit the shops 

Don’t go into the crowds without a clear budget in mind.

Know what you can afford to spend, and plan how much of this will go towards food, gifts, drinks, decorations, and other things. You can look for the best deals in advance.

Agree on price limits for gifts 

This is one of the most effective money-saving hacks. By agreeing limits with family and friends,  you eliminate the fear that someone has bought you something more expensive and makes budgeting easier.    

Be honest

If you’re struggling, chances are that you aren’t the only one. If you can’t afford a lavish Christmas, be honest with those around you about scaling back.

Opening up means that you’ll feel less pressure to buy lavish gifts, and, if you are hosting, others might suggest bringing food or alcohol with them to share the cost. 

Watch TV for free 

Christmas is the time for good telly, but you don’t need to break the bank. Most streaming platforms offer free one-month trials.

Sign up in December and enjoy relaxing at home with a good family film – just don’t forget to cancel before the trial ends.

Save on postage 

Delivery costs can add up. If you are considering using the same platform more than once, look into delivery passes.

Ask for advice 

You may think that there is no other way for you and your family to enjoy your Christmas other than getting into debt.

But before you take action, get professional advice on your situation, so you can avoid going into debt unnecessarily.

Loyalty cards 

Many store loyalty cards can save you money in the long run. If you have cards for your favourite stores already, consider using them in December to help with your Christmas spending.

If you don’t have a card, sign up now so you can build up points for future savings.  

Budget gift ideas 

You don’t need expensive gifts to show your family and friends that you love them.

As well as using our above Christmas spending tips, consider the below great gift ideas.

Give an experience 

The best things in life are free, or so they say.

New parents may value a voucher for free babysitting above a gift, and friends might be delighted if you plan a (free) day out for you all, or cook a delicious meal to share.

Gift a memory 

Photo printing is relatively cheap, and you can easily buy inexpensive frames for a thoughtful, personal gift that won’t break the bank.  

Get cooking

The kitchen is a great place to create Christmas presents. Make sweets or bake brownies, wrap them in cellophane and tie them with a ribbon to create a beautiful gift. 

Get creative 

If baking isn’t for you, there are other gifts you can make. You can make candles, soap, or jewellery, among other things, and supplies are cheaper if you make similar gifts for many people.  

How to decorate for Christmas on a budget

Everyone wants a little sparkle at this time of the year, but how exactly do you decorate your home for Christmas on a budget? 

Reuse or swap

Chances are, no one will remember what baubles and tinsel you’ve used for past Christmases, so dig out your old box of decorations.

If you want to refresh your look, why not swap some decorations with a friend? You’ll both refresh your decorations without spending a penny.  

Shop smart 

Don’t run to the pricey Christmas section in the department store for decorations. It may look beautiful, but you can get a similar effect by using their styling as inspiration and going to the supermarket instead.   

Tie it up

Buy a spool of ribbon and tie festive bows to decorate your tree. It will look classy, and only set you back a few pounds.  

The great outdoors 

Knowing how to decorate outdoors for Christmas on a budget can be tricky, but far from impossible.

 Making your own Santa signs, window displays, or even a Christmas wreath isn’t too difficult. You can also tie baubles to your trees, and ribbons to the gate.

The bright lights of January 2024 

Whichever way you cut it; Christmas is an expensive time.

Make sure you get back on track straight away in January by getting advice on your recovery plan.

As well as this, try these tips in January.

Save your Christmas bonus 

If you are lucky enough to get a Christmas bonus from your employer, don’t automatically add it to your December spending pot.

If you can, try and keep some, or even all, of this back to give you a boost in January. Alternatively, you could use it to make a mortgage overpayment or add it to your pension.   

Try Dry January 

 Many of those who overindulge during the Christmas period cut out alcohol in January. As well as making you feel more refreshed, it will also help your bank balance recover.  

Don’t waste anything 

If you haven’t managed to get through all of your Christmas food, make sure you’re planning ahead by freezing it straight away for future meals.

If you receive gifts that are going to get shoved into a drawer, try exchanging them for something you need or sell them online. 

Learn more: What are Christmas savings clubs, and can they save you money?