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How to survive the holidays on a budget

The holiday season is traditionally the time of generosity and sharing, however if the gift of giving leaves you feeling more morose than merry you may need to rethink your festive budget.

From extravagant Christmas presents to overpriced Valentine’s day flowers, each holiday we are targeted with flashy emotive marketing campaigns that pressure us to spend money to show our affection to those we love. These philanthropic sprees can leave a gaping hole in our budget, with ripple effects being felt into the following months. And it’s not just presents that we need to budget for! Christmas decorations, food and drinks, festive events with work or friends all add up alongside the added cost of the winter months. According to the Bank of England, the average household in the UK spends an extra £800 in December.

With the expected extra expenses, it’s wise to create a holiday budget to help lessen the financial burden and prevent overspending.

Your Holiday Survival Agenda

Follow the steps below to get started on your debt-free holiday plan!

Think ahead

It’s usually best to start planning for the holidays ahead of time, however don’t panic if you left it until December to start thinking about your festive plans. With a structured budget and a little smart shopping you can still keep the Christmas spirit alive!

Plan your expenses

Start by creating a budget for all your priority expenses to ensure that you have enough funds to cover them before you spend money on non-priority items. Remember that the month of December may be more expensive than usual due to the added cost of heating. You can look back at your bills for the last couple of years to gain a good understanding of what to expect. It’s also worth noting that you may be paid early in December due to the Christmas holidays and this may increase the time until your next paycheck. Be prepared for this eventuality by factoring in an extra two weeks’ expenses.

Next, it’s time to list all your anticipated holiday spending and how much each item is likely to cost. Often people only include presents in their holiday budget and are shocked when the cost of these additional charges crops up.

You may include:

Set your spending limit

Planning ahead of time will give you a rough idea of how to budget for Christmas. How do your holiday expenses compare to your disposable income? Do you have enough money to cover these expenses after you have paid for your priority bills? Always set your holiday spending limit according to the amount of disposable income you have available to avoid overspending and tapping into savings or running up debt.

Assign a specific amount of money to each of the categories and pay extra attention to the gifts section by dividing your budget into a spending limit for each person you will buy a present for. When deciding on your spending cap, compromise between expectations set by social situations and the number of gifts you have to purchase. For example, you may wish to spend more on a present for your wife than a present for your colleague. Try to stick to the spending limit as much as you can, however to be on the safe side you may want to put aside some holiday emergency cash that you can dip into in case an unplanned expense pops up.

Make a shopping list

Outline your ideas for gifts ahead of time so you can make use of the big holiday sales. Having several options will give you alternatives if the item you wanted to purchase was not on sale. Make sure to bring your list with you when you are gift shopping so you can refer back to your spending limit and not make impulse purchases.

Track your spending

Creating a holiday budget is only good if you take responsibility for it. To avoid the trap of spending more funds than you have and set up a spreadsheet outlining your financial plan. Add a section where you can track your spending according to your budget. Make sure to subtract the amount you spend from both the total figure and from the individual sections. When you are tracking your spending meticulously you can judge if you need to make adjustments to certain categories of your budget. Keep all receipts in case you need to return something.

Our top tips for a pain-free holiday season

1. Shop throughout the year.

Purchasing Christmas presents well in advance will help you put more thought into the gifts, and it will give you time to wait for them to come on sale. This way you can show them how much you really care while caring for your own financial wellbeing!

2. Build your budget.

Putting money aside each month will help you build a holiday fund without affecting your monthly budget. The earlier you start, the lower amount you will need to divert from your income each month. It may be helpful to review your budget for the previous year, so you have a guiding point for this year. Simply divide the total by 12 so you can work out how much to save aside each month.

3. Revise your gift etiquette

Exchanging gifts is common during the holidays, however most people make this thoughtful gesture without expecting anything in return. If you prefer to return the gesture as a sign of gratuity and respect, you should spend an amount that you are comfortable with and that is in line with your budget rather than trying to match the value of the present you received. Most importantly, show gratitude when receiving a gift, even if you give one in return.


The holidays are meant to be fun and care-free, so get holiday ready this season by being financially prepared! Remember that the spirit of Christmas is all about giving from the heart, not from your overdraft! Being money conscious doesn’t have to mean exchanging boring and useless gifts. With a little planning ahead you can impress your loved ones and save yourself financial grief in the months following the festivities.

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