The nation is dreaming of a frugal Christmas

•    Two-fifths of people plan to spend less this Christmas
•    East Midlands is the spendiest region
•    Average spend on presents is £100-£250 
•    A quarter of those spending less have agreed it with family and friends

Laura Suter, head of personal finance at AJ Bell, comments: 

“Rising prices and a crunch on many people’s income over the past year mean the UK is headed for a leaner Christmas than usual. Two-fifths of people plan to spend less on presents this Christmas than they did last year, with most saying their finances have been hit so they need to tighten the purse strings. Spending less coupled with rising prices causing the cost of each gift to go up, means that many people will have significantly fewer presents under their tree this year. 

“It’s clear the effects of the pandemic are still being felt in many households, with cuts to income coupled with rising prices and bills meaning lots of people are feeling worse off than last year. Of those planning to spend less this Christmas, half said it’s because they’ve seen their finances hit in the past year. Another 11% said they are already in debt and so don’t want to overspend on Christmas. 

“But it seems like some of the taboo of talking about money is being eroded, as a quarter of people said they had agreed with family and friends to spend less. Often people feel pressure to spend more than they have at Christmas, to keep up with their close ones, so it’s encouraging more people feel able to openly discuss the need to spend less. 

“Just 8% of people plan to spend more this year than last, with some making up for last year’s cancelled Christmas and subdued celebrations. Of those who plan to up their spending, two-fifths said it’s simply because they have more money than last year. Many people have been able to save money in the pandemic, while some will have seen their job situation improve on last year. More than a fifth of people planning to spend more said they are making up for last Christmas, while another fifth are being forced into spending more because things are more expensive. Those in the East Midlands were most likely to spend more, followed by the south-west and London.

“So what are people planning to spend on presents this year? Most people plan to spend between £100 and £250, with 28% of people saying that’s their budget, while 26% plan to spend between £250 and £500. Just 5% of people say they’ll spend more than £1,000. However, worryingly 13% of people have no budget or ballpark for how much they’ll spend on presents. The best way to stop costs spiralling at Christmas is to set a budget and stick to it, whether that’s for presents or for the cost of entertaining. The Bank of England estimates that the average household spends £740 more in December, but the cost of Christmas is likely to be much larger than this as people start their shopping in November, particularly with the increase in Black Friday sales in the UK.”

Five steps to stop your Christmas costs spiralling:

1.    Set a Budget: If you head to the shops with no idea of how much you’ll spend per person or how much you’ll spend overall it’s very easy for costs to quickly ramp up. Throwing an extra few presents in your basket will quickly add lots to your total bill. Even if you have a rough idea of your spend per person it will stop you going overboard.

2.    Don’t be a last-minute Larry: Everyone has done the Christmas Eve dash around the shops after leaving some (or all) of the present buying to the last minute, and it’s a sure fire way to blow the budget. With time pressure and the worry about walking away empty handed, with nothing to put under the tree, you’re very likely to throw money at the problem and spend far more. 

3.    Hunt for a bargain: Try to avoid paying full price for any present. Either make use of seasonal discounts or if you’re shopping online hunt around for a discount code to save some money. Another option is to order more presents from one shop so you get free shipping, or ask friends for a referral code, which will often give you money off your first shop. Cashback websites are a great way to make a bit of extra money with your online shopping, with many offering hefty cashback at this time of year, or free gifts. And if you can’t find any deals for something you really want, just leave it in your basket and walk away – you might find the retailer emails you a discount code to encourage you to buy.

4.    Agree a spending limit or do secret Santa: The cost of Christmas can quickly rack up if you’ve got a big family or lots of children in the family. Our research shows that people are becoming more comfortable with talking to family and friends about the spending pressures of Christmas, and you shouldn’t be afraid to raise the issue. Many people might be in the same boat and relieved that you’ve brought it up. You could either set a spending limit per person, or agree to do a secret Santa so that you buy fewer gifts. Other families may choose to only buy for the children, rather than all the adults in the family. 

5.    Ask people to bring a dish or a bottle: If you’re hosting Christmas the cost of buying all the food and drink can be a big chunk of your Christmas budget in a normal year, but this year we’ve seen food prices rise so the price tag will have crept up. You could ask people to bring different dishes (which also saves you cooking everything) or ask people to bring a bottle or some beer. Some families even ask for a monetary contribution towards dinner, which might be needed if you’re catering for lots of people.

Research based on a nationally representative survey of 1,046 people carried out online by FindOutNow on 26th November 2021