Caption: How to avoid debt this Christmas
Credit: Getty

If you’ve left your Christmas shopping until the last minute, you’re probably currently in the throws of panic ordering gifts online, while stress-eating Quality Streets.

When you want give your nearest and dearest presents they’ll love, the last thing you want to think about is restricting your spending.

But, with the cost-of-living crisis, budgeting for Christmas is in the forefront of everyone’s minds this year.

According to Yapily, more people are turning to credit cards and borrowing to ease the pressure. Add Christmas into the mix, and debt becomes commonplace. As Christmas approaches, people often feel pressured to spend well beyond their means on gifts and food, and often end up in debt as a result.

In fact, ITV research from last month showed 33% of people worried about affording food and presents for Christmas in the UK, with 11% of people going into debt over the Christmas period.

Layla Johnson, finance and budgeting expert at Creditfix, has offered their key tips for how families can avoid Christmas debt this year.

Budget to save money and spare worry

Johnson said its important to understand your own limits in advance of doing your Christmas shopping, to avoid getting caught up in an unrealistic spending spree that trips you up later down the line.

‘Before you even think of what you’re going to spend on the Christmas food shop, decorations and gifts, it’s important to get your finances in order,’ she said.

She recommends using a budget calculator to make this easier before you start making a list of what you need to buy – from gifts to a festive feast – work out how much you’re able to afford and plan from there. ‘Don’t forget to leave a little extra for events such as work Christmas parties and dinners with friends,’ she added.

Say no to Christmas FOMO

It’s always hard to see people having fun when you can’t take part. We’ve all known that FOMO feeling all too well. But it hits extra hard at Christmas, especially when its money that stands in the way of joining in.

‘Despite budgets being tight, it can be harder to decline plans at Christmas, as diaries usually get busier and events pop up all over the country,’ Johnson said. ‘It’s important to remember that your friends and family are likely earning different salaries to you – and may not even realise that you’re struggling to afford the fourth trip to a Christmas market this December.’

Spending quality time with friends and family also doesn’t have to cost the world. Johnson recommends doing something cheap or even free to ease some of the financial pressure this festive season.

‘A winter walk in nature can be therapeutic, while having friends over to yours instead of going out can be cheaper if you all chip in for a wine and cheese night at home. And when you do attend a more costly event – make sure it’s something that you actually want to go to,’ she recommended.

Remember that expensive doesn’t equal good

It’s easy for us to get trapped in the idea of thinking expensive presents are the more worthwhile gifts. But Johnson advised that limiting your gift list may be your safest bet when it comes to trying to budget. And remember, just because something is expensive, it doesn’t always mean that it’s better.

‘A gift doesn’t need to be expensive to be appreciated, and the age-old saying ‘it’s the thought that counts’ is particularly true this year – sentimental gifts often mean the most,’ she said.

Review your gift list, check it twice

You really don’t need to feel obliged to buy everyone you know a gift. That’s pricey, and unnecessary. Johnson said you might want to treat all of your close friends and family this year, but consider reviewing your gift list before you go all in.

‘Gift-giving often creates an obligation on recipients to return the favour, and everyone is counting the pennies more this year. Consider asking friends if they’d prefer to do a Secret Santa instead of banning gifts overall. You could also consider making a small charity donation, such as covering the cost of a homeless person’s Christmas Dinner through Social Bite, in a friend’s name,’ she said.

Try an office Christmas at home

Secret Santa isn’t just for colleagues. It can also be a brilliant cost saving measure for those with large families where buying everyone a gift would quickly become very pricey.

You can use a hat full of paper strips with your names on (the old fashioned way), or use a website like Draw Names if you’re long distance, to choose your Secret Santa gift-receiver, and set a budget that suits everyone. You can even create anonymous wish lists to put with your name whether you do this digitally or in=person.

By doing Secret Santa as a family, everyone gets a thoughtful present, and the gift of less financial concern. Honestly, your family will be glad you suggested it.

Buy travel tickets in advance

Johnson notes that not everyone has the privilege of driving home for Christmas, and many people will have to rely on public transport to get home to see their loved ones. For some, that can be an expensive trip.

If you are one of those people, Johnson said to make sure you book your train or bus tickets well in advance to make the most of the cheapest fares. No purchasing as you board!

Ditch Christmas credit card use

‘One holiday a year is not worth getting yourself into huge debt.

‘When it comes to this time of year, putting purchases on a credit card seems like a quick fix at the time, however, these purchases quickly add up. Understandably there can be a temptation to do this and deal with the expense at a later date but it’s good practice to avoid this if possible.

‘While there is no problem using a credit card to cover the cost of a gift or two, if possible try not to fund the entire festive season otherwise it could lead to more financial troubles down the road.’

Avoid going OTT with decorations

With images of extravagant Christmas displays filling social media, it’s easy to get a bit of FOMO about this part of Christmas too. And it seems like everyone turns on their Christmas lights earlier and earlier every year, which can add to that festive pressure.

Johnson warns that for some, though, this trend could add thousands of pounds to the already-climbing bills.

Certain Christmas decorations can wreak havock on your energy bills too. Creditfix revealed that Brits who love to decorate the outside of their houses with silhouettes of Christmas characters using rope lights could rack up the biggest bills of over £1,000 if they leave them up for over a month, based on current energy costs.

The good news is that the average fairy lights cost just 12p per day to run, so stick to the traditional stuff!  

Creditfix has created a Christmas Lights Calculator which can help Brits learn how much their display could cost, and how much they could save by delaying their decoration date or investing in different types of light.

Johnson also says that, before you buy more decorations, make sure you take time to check on what you already have. ‘Get into the loft and dust off old decorations that have a more sentimental value, before splashing cash on anything new.’

Ask for help

If you’ve tried all the cutbacks and you’re still struggling, it’s important to remind yourself that there’s no shame in asking for help. It’s not always easy to reach out for help when you need it, but knowing your options is invaluable.

Johnson said ‘If you’re worried about more than just covering the cost of Christmas, it’s important to find out the options available to you. Dealing with debt might seem daunting but finding support is often easier than you think.’

She added, ‘Chatting with a debt expert can make managing your budget that much easier. As well as finding the right solution for you, we can help you put a realistic budget in place to make managing your money a little easier all-year round.’

Get further advice on debt and money from Citizen’s Advice.

Enjoy Christmas without scary bank statements