Eight ways to cut Christmas costs without cutting the fun

There’s no doubt that the cost-of-living crisis is taking the sparkle away from Christmas for many families.

New research from retail and hospitality technology company Fourth suggests the current sky-high costs for everyday necessities – including energy and food – means half of consumers say their Christmas shopping experience is being negatively affected, and a similar proportion are planning to spend less over the festive season.

“The cost of living is biting everyone, and Christmas can feel like a burden rather than a joy,” agrees finance expert Holly Mackay, founder of the consumer financial website Boring Money

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But Rajan Lakhani, a money expert at the smart money app Plum promises that although times are tough, there are many ways to cut festive costs.

A family on Christmas morning. Picture: Alamy/PA.A family on Christmas morning. Picture: Alamy/PA.
A family on Christmas morning. Picture: Alamy/PA.

“Buying presents for family and friends is going to be harder as prices rise, stretching family budgets further,” he says. “But it’s definitely still possible to budget for a wonderful family Christmas this year.”

Here, the experts give their tips…

1. Agree to buy a gift for just one person

Mackay says a good way to keep costs down is to pick names out of a hat and buy one really nice gift for just one family member, rather than lots of little things for everyone – like a secret Santa. “This will save all those last minute little expenses which can really add up,” she says.

2. BYO dishes for Christmas dinner

If you’re hosting Christmas, make a list of things for your guests to bring, to spread the financial burden, advises Mackay. “Ask other people to bring wine, a cheese board or some nibbles for before lunch,” she suggests.

3. Set gift spending limits

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When it comes to buying gifts, set a spending limit for each person, and make sure your gift list is as small as possible, says Lakhani. “This year, my wife and I have agreed on a budget to stick to and to focus on getting one gift for each other that we’ll enjoy,” he says. “We’re doing the same for our kids.”

4. Gift pre-loved

Consider buying second-hand gifts, especially items like DVDs, books and toys – children, particularly younger ones, won’t know they’re pre-used and you’ll save a stack of money. “It might also benefit the environment, as you’re reducing waste,” Lakhani points out.

5.Budget a year in advance

“You can think about setting up a budget for next year’s Christmas from the start of the year,” advises Mackay. She says budgeting apps let you set up lots of separate pots for your savings, and explains: “Spending for children in particular can be ‘lumpy’ – it tends to hit in the summer (holiday clubs), September (back to school) and Christmas. Having separate savings pots which you pay a little into each month can make it easier to manage these months when suddenly everything needs to be bought at once and budgeting gets harder.”

6. Be strong

All parents want to buy everything on their child’s Christmas list to see their delighted faces on Christmas morning. But Lakhani warns: “If you’re struggling to afford something for your children, don’t give in to pressure – buying them something might make you all feel better in the short-term, but it will cause more hardship over the long-term and means you can’t get what your child really needs, rather than wants, in the future.”

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He says honesty is the best policy when talking to children about money, and suggests parents explain to children why Santa can’t afford many presents this year as soon as they can. “The earlier you have the conversation with your child, the better.”

7. Reduce subscription costs

Watching TV is a huge part of the festive season, but scaling back on streaming services like Netflix and Amazon could save precious pounds, says Alford. “Why not make a return to analog and bag some festive family classics on DVD that you can look forward to watching year on year?” she suggests.

8. Look for real deals

Just like the rest of the year, watch out for festive discounts and use voucher codes whenever you buy online, advises Lakhani. He suggests also trying to get cashback on purchases, but warns: “Be careful of getting sucked into special offers on things you might like to have, but don’t actually need.”

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