Financial Planning

How Can I Financially Prepare for Christmas?

KLOFinancial |

Christmas is the most expensive time of the year for many households, with buying presents for family and friends, preparing food for Christmas dinner, and attending Christmas gatherings all contributing to the huge festive dent in your finances.

According to the Bank of England, a typical UK household spends £740 more in December due to Christmas spending, which is 29% more than in other months. However, with the right personal financial management, you can better prepare yourself for the festive season and reduce the financial impact of increased spending.

1. Start saving in January

Setting up a Christmas savings account and putting a little bit of your income away each month from the beginning of the new year can help you save to cover the cost of the festive period.

If you figure out how much you expect to spend on gifts and other expenses, you can then divide this between the months in the year. From this, you will reach an estimate of how much you need to put into the savings account each month.

When Christmas comes around, you will then have these savings readily available to help you manage the additional costs, as well as prevent you from having to borrow money to cover yourself for the period.

2. Figure out your household budget

By checking total outgoings across your statements, direct debits and standing orders from all accounts, you can estimate your total household income and monthly outgoings for December.

You can then put money aside to cover the monthly outgoings and figure out how much money you have left to spend on Christmas! 

3. Write a precise shopping list

By making a precise shopping list (and sticking to it), it can encourage you to buy more strategically and help prevent overspending and unnecessary buying across the Christmas period.

If you plan your shopping list, you can take advantage of sales in the lead up to Christmas (e.g. Black Friday and Cyber Monday). Planning your list in advance also gives you time to shop around for presents and compare prices across different shops/brands before purchasing – helping to ensure you get the best value for money.

Buying in advance can also help avoid panic buying expensive gifts as a last-minute solution!

4. Set spending goals

Planning your gifts and setting spending goals can help with budgeting. It is important to consider the number of people that you need to buy gifts for, and roughly how much you want to spend on each gift.

The same can be applied to other Christmas expenses, such as Christmas dinner and social outings and celebrations. If you have a budget for the month, it can help you limit overspending on certain things to ensure you have enough money to cover yourself during the month of December.

5. If you borrow money, do it carefully!

Did you know, according to Milsted Langdon, at least 30% of the UK population gets into serious debt due to their Christmas expenditure. Therefore, it’s best to avoid borrowing money wherever possible.

However, if you do need to borrow money, it is key to ensure that it is a manageable amount and that you have found the right 0% purchase credit card to allow for Christmas spending habits.

You can avoid paying any interest on a 0% purchase credit card by making sure you apply for it in advance, and ensuring you always pay the monthly minimum payments and knowing when the 0% period ends. This allows you to clear everything off the card before the high interest rates are chargeable.

6. Speak to a financial adviser

With the support of a financial adviser, you can implement realistic spending goals and good personal financial planning.

This will help to ensure that you are continuously working to improve your financial situation – whether it be for the Christmas period, life milestones (e.g. buying a new home) or achieving other financial goals.

KLO Financial Services

At KLO Financial Services, we are independent financial advisers, offering bespoke financial services to our clients, from personal financial management to independent pension advice. Want to find out how our financial advisers in Warwick, Birmingham and London can help you organise and improve your finances?

Get in touch on 01926 492406!


Any research is for information purposes only and does not constitute financial advice. The value of investments and any income from them may go down as well as up, so you may get back less than you invested. Past performance cannot be relied upon as a guide to future performance. KLO Financial Services Ltd are registered in the UK, company number 08711328. We are authorised and regulated by the Financial Conduct Authority, reference 710272.