Saving versus borrowing for Christmas

It’s difficult to pay for Christmas out of December’s pay packet alone, so it makes sense to save up as much as you can beforehand. The earlier you start saving, the less you need to put aside each month. Even a small amount over a few months can make a big difference.

Borrowing money to cover your Christmas spend could come at a price in interest and fees. At best, that could be money used for something far more worthwhile – at worst, it could leave you with debt you may struggle to pay off.

Christmas savings clubs won’t offer you interest on your savings and come with a greater risk than saving through your bank or building society. To find out more, read our guide to Christmas savings clubs and schemes.


Step 1 – Set a budget

The average Christmas spend per household is around £500, which includes food, presents, travel and decorations, among other expenses.

To begin your budget, make a list of family and friends you will be buying presents for and allocate an amount for each person.

If you are hosting dinner then consider how many people will be coming over and how much you will need to spend on food and drink.

From there, you should be able to work out how much money you would need to put away each month.

For example, saving £50 a month from the start of the year will get you £600 to spend at Christmas.

Use our Christmas money planner to help create your own budget and see how much you can save in time for Christmas Day.



Step 2 – Work out how much to save each month

Treat saving in the same way as you would a bill. Committing to saving a regular sum each month or week is more effective than simply saying you’ll save whatever you have left over, which may be nothing. Try to be realistic – it’s better to commit to a manageable amount than to aim too high and give up.

Not sure how much you can afford to save? Start small – put your spare £1 or £2 coins into a jar each week. If that works, try setting aside a bit more on a regular basis.

Use our Savings calculator to see how much you’re able to regularly put aside and how quickly you’ll reach your target of credit-free Christmas.

If you’re still struggling to find ways to save, read our guide What if you can’t afford to save?

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Step 3 – Consider starting some new Christmas traditions

Pressure to please loved ones and to give children the perfect Christmas tops the list of reasons people overspend during the festive season.

Consider starting some new Christmas traditions that the whole family can join in with and save some money along the way.

Firstly, start early. Picking up Christmas essentials like crackers or decorations in the sales can mean big savings, sometimes around 50%. If you know what gifts you need to buy, it can help to pick up an item a month to help spread the cost and save you the hassle of shopping when everyone else is.

You could also embrace the digital age and email Christmas cards to save on postage. There are lots of free websites that let you create your own cards, with family photos and videos. First class stamps cost 60p, while second class stamps cost 50p, so if you plan to send 30 cards by email this year, you could save between £15 and £18.


A pre-Christmas clear out with the family will help you get in order for the festive season but could also put some money back in your pocket. Once you’ve put aside anything you no longer want, make some extra cash by selling it online or at a local sale. If you time it right, you’ll find plenty of people looking for second-hand gifts. Check out our guide How to get rid of clutter and make money.


If you’re buying gifts for work colleagues, you could set a limit of £5 to £10. You could also give something handmade instead, especially if you’ve got a hidden talent – with everyone feeling the pinch, your suggestion may be very welcome.

If you’re buying presents, make sure you read our article Smarter shopping – tips and tricks to save money.


For more information please contact one of our One Stop Finance Team Below



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