5 Ways to Plan Your Christmas Budget

It may only be early in the season, but it pays to start thinking about your December finances sooner rather than later. No one wants to wake up from the Christmas period with a financial hangover, however with presents for loved ones to buy, parties and endless social events throughout December, it can be easy to underestimate just how much cash you’ll get through whilst having a holly jolly Christmas.

New research from digital financial coaching app Claro Money has shed light on the lack of financial planning in Britain, revealing that 39% of UK households don’t have a household budget. Furthermore, in the last 12 months 29% of UK households reported that their income did not cover their outgoings. This, teamed with the inevitable extra spending on festivities in the upcoming months, could land many in financial hot water in the new year.

Fortunately, there is professional help and services available for those who feel they are struggling to get a grip on financial planning and help make Christmas 2021 free of financial woes.

The experts at digital financial coaching app Claro Money have shared five simple tips for preparing your finances for Christmas spending, to show that you don’t have to restrict yourself from having fun to make conscious money decisions that can benefit you later on.

Look back at last year
A quick look over previous years’ bank statements can help you figure out what you typically spend in the weeks running up to Christmas. Use this as a starting point when working out how much extra cash you will need to save this year. Make a note of what you spent the most money on, whether that’s extra special gifts for the family or specialist tasty treats for your Christmas feasts and break it down into categories so you can work out where your hard-earned November pay cheque is most likely to go. As many people may want to make up for last year’s missed Christmas, comparing your outgoings to Christmases past will help you to measure your spending and identify the areas you would most benefit from cutting back costs on.

Start the savings plan early
We know what you’re thinking, Christmas may well be more than three months away, but it always comes around sooner than we think. So, the sooner you start to prepare, the better position you will be in to make the most of your favourite Christmas Markets and festivities. Make a decision about how much cash you would be able to put aside each week until December, on top of your current outgoings and savings. Be realistic with this amount: if you know you can’t say no to after work Christmas drinks, then make sure you save for this, Whilst this amount can be flexible (emergencies come up for everyone), make sure you put even a small amount each week into your Christmas savings pot.

Keep the Christmas spending separate
Now you have made a plan and set an amount to start saving every week up until December, be aware that this extra spending pot should be separate from both your day-to-day spending account and your long-term savings. This will help you keep track of exactly how much extra you have to spend, how much you have spent so far, and encourage you to make conscious financial decisions with the money you have for Christmas.

Whilst saving a percentage of your incomings each month is always a good habit to have, Christmas spending will need an extra push to make sure you can have all the fun you’d like over the Christmas period without worrying about the bill come January. Be prepared to have less disposable income in the months leading up to December as you save more – this may seem a sacrifice at the time but is worth safeguarding your finances in the new year and will ensure you have a good time at Christmas.’

Cut your losses
It’s been a difficult year (and a half) for most and you may find that your Christmas budget is a little tighter than previous years. This doesn’t mean Christmas 2021 has to be a dry affair. Every year, the average Brit spends £1,116[1] at Christmas. Think about how you have previously spent money at Christmas and be honest with yourself – what was money well spent and what was… well…. a bit of a waste?

We all like to go overboard at Christmas but take time to consider what you are spending money on. Do you really need seven packs of party food for you and your partner on Boxing Day? Is the gift you’ve bought for your auntie who you only see at weddings and funerals essential or would she be just as happy with a card in the post?

Whilst lots of aspects of Christmas spending will bring us joy, it’s important to really consider the wellbeing impact of your spending both in the short-term and long-term. Think about what expenses you would be willing to give up, such as buying gifts for every family member or new outfits for every occasion, and the alternative ways you can enjoy these festivities just as much. To help keep all online shopping in check, including Christmas spending sprees, Claro Money, has created a Google Chrome extension to help shoppers discover how long they would have to work to pay for the total cost of their online shopping baskets – based on their salaries.

Spread Out the Costs
Whilst you won’t be able to spread out the costs of all your Christmas expenses consider purchasing early what you can. This will give you more time to shop around for the best deals and save money, whether that’s on Christmas presents to make your loved ones smile or that Christmas part outfit in the end of summer sales.

Supermarkets often allow shoppers to order their Christmas haul as early as November, so you don’t have to worry about this significant cost come December.

So, there you have it, whilst it may only be September there is nothing wrong with preparing for the festive period and taking control of your finances with these tips from Claro Money.