6th December 2021

It’s no surprise that our spending soars around Christmas, with Bank of England data showing the average household spends an extra £740 in December.

This year households may be even further out of pocket, as UK inflation has surged to a 10-year high of 4.2 per cent, driven by higher energy prices and product shortages amid supply chain issues. Sticking to a budget this Christmas could be helpful at a time when household bills are likely to continue rising next year. i has put together some top tips on planning for a more frugal Christmas.

Set a budget

The easiest way of making sure you don’t spend too much at Christmas is to set out a budget and stick to it. For example, you may decide to spend up to £30 on gifts per person. Paul Stringer, a director at lender Norton Finance, recommends not exceeding your typical monthly spend by more than 15 per cent.

“This way, you can still give yourself flexibility for the festive season without limiting other areas of spending. Treat yourself like a business. If it looks like you may go over budget, make changes to reduce non-essential spending,” he says.

To keep track of your spending online, you could use an app such as Money Dashboard. The app allows you to view all of your current accounts, credit cards and savings in one place. Alternatively, many banks allow you to set up “savings pots” where you can set aside a sum of money for a particular event.

If you wanted to reduce the amount you spend on gifts, you could do a gift exchange or “secret Santa”. This is where you arrange with friends or family to each buy for one person, picking names out of a hat.

“For years I struggled with keeping a tight budget at Christmas and I felt that Christmas was a stressful time of the year,” says Mary Elizabeth, founder of personal finance website MeMoreMoney. “My family agreed to do a gift exchange last year. Rather than spending £30-£40 on each family member, which added up to £200 for me, we picked each other out of a hat and spent £50. It caused less stress leading up to Christmas.”

Shopping tips

Draw up a list of what you plan to buy people, and keep an eye online for any offers or discounts for those gifts. Many retailers will not wait until January to start sales. You could sign up to mailing lists of your favourite brands, which may alert you by email when they launch a sale, or you could just visit your favourite websites or stores regularly.

Cashback websites such as Topcashback and Quidco will pay cash into your online account if you shop through their websites. Websites such as VoucherCodes and VouchedFor will give you a voucher code to reduce the cost of your order at the online checkout.

You could also check out the Hotukdeals website. This lists the top deals and discounts across a range of goods from Dyson vacuums to headphones and bedroom furniture. If you know what you want to buy, use a price-tracking website. PriceSpy, for example, gathers prices from various online retailers to show you where you can get the best deal.


The cost of many key ingredients for a Christmas dinner has risen substantially recently as a result of labour shortages, supply chain issues and higher commodity prices.

To stick to a strict budget for food and drink, it may sound obvious but, ideally you want to draw up a list of everything you need and buy exactly what’s on the list. Buy as much as you can as soon as possible, taking advantage of offers when you see them. Data shows households are already stocking up early this year – 1.6 million bought their Christmas puddings in October, up by 400,000 on last year, according to data firm Kantar.

If you have freezer space, you could buy meat and other foods to freeze and take out at Christmas time. Buying food in advance will help with your budgeting. Check out the Olio and Too Good to Go apps to see if you can pick up food locally for free or at a reduced price. Both apps aim to minimise food waste by connecting consumers with local businesses that are looking to offload surplus food.

Pick up unwanted toys

Children often grow out of toys quickly and many parents are happy to pass them on for free, or at a heavily-reduced price. Search Facebook Marketplace or local charity shops for bargains. There is also an app called Young Planet where you can find toys being given away for free.


If you don’t have enough savings to cover the cost of Christmas, think carefully before borrowing money. One option is to buy items on a credit card. This would allow you to buy them upfront, and then make monthly repayments. Minimum repayment amounts on a credit card are small – often just £5. But be aware, credit card interest is around 20 to 40 per cent a year so ideally you would want to pay the money back as soon as possible.

There are ways to avoid paying any interest to your credit card provider. Either repay what you have spent in full at the end of the month, or sign up to a new credit card that offers interest-free spending for a certain length of time. The best 0 per cent spending credit card is currently from Tesco Bank, which offers 0 per cent interest for up to 23 months.

Another option is to take out a personal loan. Interest rates are likely to be lower than a credit card but there is no chance of benefiting from an interest-free period. There are also “buy now, pay later” services that allow you to stagger repayments. Payments may be interest-free initially, but not on longer financing options. If you miss a payment, a late payment fee may be charged and it could affect your credit score.

Source: iNews