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How to manage your money over Christmas

Christmas gift box and star candy sprinkles on white background. Copy space
Christmas gift box and star candy sprinkles. Photo: Copy space

Even the most frugal of spenders can overdo it at Christmas. From presents and parties to food and drink, it can be easy to go over budget in the run-up to the big day.

With the average person spending £567 on Christmas every year, it is a huge spending period for Brits. According to research by the insurance agency Bobatoo, there has been an 84% rise in the number of UK shoppers spending over £700 on Christmas presents alone in 2019.

There’s also a temptation to overspend too, with 44% of respondents saying they would go slightly over budget this year - and a further 10% admitting they would overspend by a significant amount.

Everyone knows this time of year is expensive - so how can you manage your finances over the festive period and avoid going into debt?

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“There are presents, cards, wrapping paper to buy, there are Christmas trees and decorations, there is extra food and drink, there is extra entertainment and Christmas parties - you might want a new outfit, entry fees and maybe travel or accommodation,” says Anna Goodwin, an accountant who offers personal finance training and mentoring services.

In addition, working hours may change over the Christmas period, which may leave some people out of pocket.

“For people who only get paid for the hours they actually work, they may be losing money over Christmas,” Goodwin adds. “I was speaking to someone the other day who closes their factory down completely, and it affects their bottom line because of course they don’t get any money coming in over Christmas. It’s the worst time for it to happen.”

Plan ahead and budget

“We all know Christmas is coming - so rather than it being a panic and thinking in January, ‘I’ve maxed out all my credit cards and I’ve got no money to pay it back’, the thing to do is plan,” Goodwin says.

“Sit down and think about how many presents you want to buy, how much to spend per person and enter it into a budget so you know what you’re looking at. Include your food and drink - are you going to be feeding the family on Christmas Day and Boxing Day?

“I was giving some training the other day and I was speaking to someone who said they got their Christmas present costs down by half because she put it in a budget,” she adds.

READ MORE: Five easy ways to cut down your day-to-day spending

Piggy bank wrapped in Christmas string lights
Piggy bank wrapped in Christmas string lights. Photo: Getty

Put money aside throughout the year

Although it’s difficult to think about Christmas in July, putting aside money throughout the year will help you cope with spending more in December.

“Everybody thinks we should be full of the joys of the season, so it seems a bit mechanical to budget for it but it is the only way that is definitely going to be successful,” Goodwin says. “For future Christmases, save some money each week or each month based on your budget for this year.

“Think ahead, and say ‘I’m going to need £1,000 for everything’ - think how much that will be per month and put that money aside. Have a plan.”

Buy early

Rather than buying food and presents last minute, purchasing what you need throughout the year will spread the cost out. It’s also worth collecting vouchers for supermarkets to save money.

“Buy the food early and freeze it. A lot of the supermarkets do the Christmas food early at a lower price, and the same with alcohol - they have various offers. Think about what you are likely to need and go back to your budget,” Goodwin says.

“For Christmas presents, buy throughout the year to spread out the cost. You’re more likely to find something cheaper and appropriate for that person. Buy in the sales too - you have a lot of opportunity there.”

READ MORE: How to organise your finances when you move in together

Try secret Santa

If you have a group of friends of colleagues, it’s worth arranging a secret santa rather than buying a present for each person.

“There’s always the possibility of making presents or cards - that of course depends on how much time there is - but it can be nice to get the children involved as well,” Goodwin says.

“From my experience, it’s nice to receive homemade presents because it shows people have really thought about it. As long as you cost everything, it can still work out cheaper.”

Be wary of false deals

It’s easy to get drawn into spending unnecessarily if you think you’re getting a good deal, but just be wary of dodgy discounts.

“There is of course Black Friday but people are divided on whether this is a good thing or a bad thing,” Goodwin says. “A lot of people think the shops inflate the prices before they reduce them.”

According to research by Which, 87% of the Black Friday deal items they investigated in 2017 were available for the same price or cheaper at other times of the year. The deals included 94 of the most popular tech, home and personal care products.

Don’t forget your everyday bills

It’s easy to overlook everyday expenses, but remember the rent, the mortgage, utility bills, food bills and other existing debts still have to be paid and the consequences of falling behind on payments can be severe.

Christmas might be a time for giving, but it’s important to get your priorities right and spend within your means to avoid a headache later down the line.

READ MORE: Five ways to be less wasteful with food and save money