How to budget for Christmas

Love it or loathe it, Christmas is fast approaching, and for many of us, it’ll be the most expensive time of the year.

From buying gifts for friends and loved ones and entertaining dozens of family members, the festive season can be extremely costly.

So how can you make sure your Christmas spending doesn’t tip you into the red and that you don’t end up spending more than you can afford?

Set a realistic budget

It’s important to start with a clear understanding of how much money you’ve got to spend without compromising on other expenses, such as your day-to-day living costs and putting money into savings and pensions.

Review your income, outgoings, savings and outstanding debts so you can get a clear picture of what you can afford to spend on your Christmas festivities.

You can then set a realistic budget, based on all your likely expenses, from food and drink to gifts and travel costs.

Prioritise your spending

Not all Christmas outgoings are equally important. For instance, while you might want to get presents for your other half, your children or your parents, it might be less of a priority to buy presents for work colleagues, or pay over the odds for expensive decorations.

So work out what you consider essential and allocate your budget accordingly, with smaller sums being spent on less important purchases.

Start shopping early

Christmas Day is set in stone, so there’s no reason to wait until December to start buying your Christmas presents.

You could take advantage of sales, discounts and the likelihood of there being more stock in the shops by purchasing early or even throughout the whole year.

Use cash or prepaid cards

Even if you’ve set a budget, the temptation to overspend might still be there, and with that comes the risk of getting into or exacerbating debts. In that case, it could be worth taking steps to ensure you never go above the limit you’ve set yourself, such as only using cash or a prepaid card, so you’re only dipping into a single pot of money with a clear upper limit.

Track your spending

Keep a close eye on your spending during the run-up to Christmas, perhaps by recording all your expenses in a dedicated budgeting app or spreadsheet.

This will help you stay within your budget and see where and when you might be overspending, in which case, you’ll have time to make adjustments to your plan where necessary.

Research the market

The first price you see for an item isn’t always the best, so make sure you shop around for the best deal before making a purchase.

Small savings here and there soon mount up, freeing up cash for other festive expenses, such as extra food for the big day or an additional stocking filler.

Make homemade gifts

Homemade gifts, such as custom photo albums, crafts or sweet treats, are a great way to ease the burden on your wallet at Christmas.

The fact that you’ve gone to the time and effort to make something special can also make a gift more meaningful to the recipient.

It’s important that Christmas outgoings don’t jeopardise or interfere with your other spending commitments beyond the festive season.

So it’s well worth planning in advance to make sure you aren’t putting your financial goals at risk by going overboard.

With just a little thought and effort, you can enjoy the best of both worlds – a happy Christmas and staying on course to achieve your longer-term objectives.

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The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK. Welby is a trading name of Welby Associates Wealth Management Ltd Company Registered Number NI630504 who is authorised and regulated by the Financial Conduct Authority, FCA register number 697372. The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit

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