It’s a well-known fact that Christmas is an expensive time of year. For some people, it might make little difference to their usual monthly spending because they have the luxury of large savings or a high income, but for others, Christmas can be stressful and full of financial worry, making it difficult to enjoy the magic and joy shared by everyone else. One of the best ways to prepare for the festive season and ensure you don’t land in financial difficulty is to save in advance and adjust your budget to accommodate additional expenses without compromising your non-discretionary expenditure.

How to Save

Learning how to save money is no easy feat and it can take time and energy to find a way that works for you. The key to saving well is perseverance, because not everything will always go according to plan and that may mean saving less from time to time or even having to use the money you’ve already saved, putting you back to square one. However, once you’ve developed some strong saving habits, you’ll find it much easier to save consistently and effectively, benefitting not only your Christmas money management but year-long financial resilience too.

Things to consider when trying to save money

You will likely have to make some cutbacks

If you’ve not been able to save thus far, and you’re now making a conscious decision to start, you’ll probably have to make some reductions to your usual spending. When working out how much to cutback, it’s important to remember that your essential expenditure is non-discretionary so you can’t stop paying bills in order to save money instead. You will probably want to focus on cutting down your invisible spending first, which includes things like buying lunch out when there’s food at home and clothes shopping for fun rather than necessity.

Saving on your household expenditure

While your priority bills are non-discretionary, you can still save money in these areas by making a few small changes. Switching energy services, broadband providers and even your bank account could save you hundreds of pounds over the year. It does require a little effort to research and compare products, but often companies will offer introductory discounts and fixed-rate contracts in order to win your custom over other providers. As long as you aren’t breaching your existing agreements, there’s nothing wrong with switching multiple times if it helps save you money. You need to be strict about transferring the monetary difference into your savings though, otherwise it can get lost in your regular spending. If you’re not motivated enough to proactively search for new deals from month to month, at least look around when a contract comes up for renewal. Auto-renewing things like car insurance and house insurance can cost you hundreds of pounds.

Temporary vs sustainable savings

Like a crash diet, it might be possible to massively amend the amount of money you spend for a short period of time in order to meet a deadline, but it’s unlikely you’ll be able to live like that long-term without suffering some severe effects. For example, if your car insurance is due in 2 months’ time, you might save £200 a month for a couple of months in order to meet the annual payment, even if this means getting rid of takeaways, nights out and new clothes. However, cutting back on these things permanently is not a sustainable change and could start to affect your mental health and social life. In the run up to Christmas, you might be able to make a few extra savings by cutting back on regular spending in order to accommodate the festive costs, but if your new budget is reducing your quality of life and making it hard to live your day to day, then you may want to make a few sustainable swaps as an alternative. For example, instead of giving up your morning coffee every day, consider opting just for a Friday coffee; maybe instead of going out weekly, you could go out every other week. Christmas should be fun, and you shouldn’t have to deprive yourself in order to finance it.

Using Credit for Christmas

Using small loans in the winter months is quite common - they’re a quick way to access credit to help you meet unexpected or increased bills when your remaining budget is too small. However, you still have to be responsible when it comes to credit at Christmas. Even if you’re desperate to show your family how much they mean to you, taking out loans to finance present buying is probably not a good idea. January is a long month, and we can forget just how many repayments we have due. Taking out extra credit unnecessarily will increase your financial commitments and you could find yourself unable to make all of your repayments on time at the end of the month.

Adjusting your Budget for Christmas

Instead of looking where to borrow money now, you could be comparing prices online, drawing up a budget and working out how to maximise your disposable income to help you with the additional costs of the festive period before it’s too late. Readjusting your budget is usually an unwelcome task but one that can bring a renewed sense of joy and accomplishment. We can easily get stuck in our ways with invisible spending and day to day cashflow, but conducting a review of your budget every few months can help you reset your finances and free up some cash without compromising your essential expenditure. This is especially relevant in the months running up to Christmas. Even if you only find an extra £50 a month, you’ll be able to finance a big Christmas dinner, crackers and pudding, and maybe even have some cash leftover for a few little presents too. If you can save £100 in the 3 or 4 months before Christmas, you’ll pretty much cover the costs of everyone’s gifts. Any leftover funds can always go towards the increased energy bills during the cold months, any credit repayments due after Christmas, or – if you’re really organised– you could put it away for next year.