In Britain, we love to indulge over the festive season. Extravagant gifts, trips to Belgian Christmas markets, expensive champagne, luxurious Christmas dinners with all the trimmings. All this adds up, making December an eye-wateringly expensive time for the typical Briton. In this month alone, we spend 42% more than our European neighbours. But how much do we really spend on Christmas?
According to OnePoll, last Christmas British parents were expecting to spend an average of £1,149 on Christmas. In fact, well over half (64%) admitted they were likely to exceed even their own budgets. This is roughly equivalent to the cost of a typical family holiday, and for many, it may seem reasonable enough. Another report revealed that one in eight spend £500 to £1,000 on presents alone. And nearly a quarter of parents splash out between £250 and £500 per child on presents.
It seems at Christmas, the more you have, the more you spend. David Beckham made the headlines one year for surprising his wife, Victoria, with a $100,000 diamond-encrusted handbag, a custom-built $500,000 Rolls-Royce Phantom and a $2.4 million Boucheron ruby and diamond necklace for Christmas.
Deloitte’s research revealed we also spend considerably more on food and drink, socialising and travelling. This includes weekend breaks, the vital food shop with its seasonal luxuries and – of course – the Christmas party.
Christmas expenditure seems to snowball year after year. It gets hard to keep track of how much this festive season really sets you back.
Keeping up with the Joneses
As humans we’re naturally competitive beings and Christmas is no exception. Many people strive to have the greatest Christmas party, the most extravagant presents and the best lights in the street.
You might remember that Danny DeVito film ‘Deck the Halls’, where the action centred on the contest to have the best Christmas lights. It’s easy for Christmas expenditure to get out of control just to keep up with the Joneses.
Tips to be financially savvy this Christmas
Regardless of whether you have a £1,000 or a £100,000 budget, being financially savvy is necessary. This will avoid you blowing your budget and having a financial hangover come January.
1. Creating a Christmas budget
Firstly, start with how much you want or can afford to spend this Christmas. Once you’ve done that, you can separate the budget into categories. These could be (e.g.) Christmas food shop, gifts, decorations, entertainment/socialising and New Year’s Eve party.
Money Saving Expert explains “The key is to set yourself a budget before deciding what presents to buy, first think what you can afford. Then always look at how to get the best price for each item”.
2. Tracking your spending over Christmas
Alternatively, you could use an app like Yolt to keep track of spending in different areas.
3. Using a cashback credit card for Christmas
Using a cashback credit card to pay for Christmas expenditure could save you some money.
For example, if a card gives you 5% cashback and you spent £5,000 on the card, you’d get £250 back. Remember to read the small print to find out if the cashback is paid monthly or annually. Also check the minimum spend each year to start accumulating cash rewards. Of course, with any credit card, if you can’t pay off your full balance each month, you’ll end up paying interest, so only choose this option if you know you’ll be able to clear the debt in time.
4. Avoid last-minute Christmas-present panic
Three out of five people in Britain leave their Christmas shopping until December. This means battling through crowds of frustrated Christmas shoppers, running the risk of preferred options being sold out and those expensive last-minute delivery fees.
Leaving things late gives you little or no time to shop around, and there are few things more frustrating than paying over the odds for a second or third-choice gift.
Starting early gives you plenty of time to view the best deals and purchase gifts in the black Friday sales. Saving money on presents will mean you get a fuller stocking for less.
If you need some help deciding what’s on your present list, take a look at this blog on the psychology behind the perfect Christmas gift.
5. Help your children save for a brighter future
Many parents spend lots of money on toys their children will only use a handful of times. Not only is this wasteful, but it also sets a poor example of irresponsible consumerism for children.
Putting a portion of the money reserved for buying Christmas presents into their junior ISA could have many benefits and help them in the long-term. Previously, we published a blog on the five reasons why you should put money into your child’s savings account for Christmas, which you can read here.
During the festivities, it’s good to remember that Christmas is about spending quality time with your friends and family. You may not remember all that food, the expensive champagne or the “luxury gifts” now sitting at the back of the wardrobe, but you will remember the time you spent with your loved ones.
I hope you have a very merry (and financially savvy) Christmas, filled with many happy memories and no financial hangovers.