How to save money for Christmas

Christmas may only come once a year, but it can be so expensive that we spend the rest of the following year trying to pay for it. From the decorations to the food to the gifts to the huge amount of socialising, our spending well and truly spikes once December rolls around.

But, with that increase in spending can also come an increase in worrying about finances. And together with the general increase in the cost of living, saving money for the festivities can be tricky.

Tricky, but not impossible. And it doesn’t take any Christmas magic to spend less, either. Below, we’ll explore how to save money for Christmas so you can celebrate in style this holiday season and not have to worry too much about what’s happening in your bank account.

Take a close look at your budget

As with most things, the first thing we recommend when saving money for anything is to take a close look at your budget. Budgeting isn’t the sexiest thing in the world, but it’s important to keep track of your funds and what’s coming in and going out.

Make a list of everything that’s likely to cost you during the Christmas period. That includes gifts, decorations, entertainment, food, nights out and travel. Once you have the total, you know how much money you need for the Christmas you’d like.

So, crack out a spreadsheet and start working out your finances. We’d recommend that you do these anyway, regardless of whether or not you want to plan for Christmas but Christmas is a great time of year to start.

Lexi Burgess, a personal finance expert from the free credit-score app, CredAbility, shares her top tips:

"To stay on track, budgeting apps or a simple spreadsheet can make a big difference. Apps like Money Dashboard or Emma allow you to categorise spending, set budgets, and track in real time. If you prefer a low-tech option, a spreadsheet or a pen-and-paper approach can help keep spending visible. Whichever method you choose, be honest about what you’ve already spent and where you might need to adjust. Tracking as you go will help you avoid nasty surprises come January."

Start saving as early as you can

Once you’ve worked out your budget, you can get a good idea of what you can save each month. Because Christmas is often such a big expense, not many people have the luxury of paying for it in December alone. Saving throughout the year means you have a less severe impact on your finances once December rolls around.

But it can be a tricky balancing act. You want to make sure you save for Christmas, while at the same time also not making things more difficult for yourself every month. We have some tips on ways to do this in our guide on how to save money.

Limit non-essential spending

One of the most obvious ways to save cash for Christmas is by limiting your spending on non-essentials. This is always easier said than done, but it is super effective if you can. Even just getting rid of one of your streaming subscriptions will save you more than £100 a year, which is usually more than enough to cover the cost of a slap-up Christmas dinner, your dessert and maybe even a bottle of bubbles.

The same applies to any type of luxury purchase you make. Yes, you may love your Saturday night takeaway, some fancy clothes or that flashy new gadget, but by cutting back on just a few, you can make a big impact on your holiday budget. Our household budget calculator should come in handy to help you plan your finances

Create a separate savings account or savings tin

One of the most effective ways to save is basically by storing money somewhere where you don’t usually access it. It’s so easy to tap tap tap your debit card that saving money in your regular account can be almost impossible to track. Even saving money in your usual savings account means it can get away from you.

Consider opening a separate savings account specifically for Christmas. If you don’t want to go that far, a tin or box you can save cash in can work just as well. It means you have those funds kept for something specific and you won’t be tempted to spend it or accidentally dip into it before the Christmas season begins. We've got a household budget calculator

that should help you with this.

Decorate on a budget

It can be easy to get carried away with the decorations. Many of us love to have our homes resembling Santa’s grotto, but it’s not exactly cheap.

It might not be your number one choice, but consider buying an artificial Christmas tree that you can reuse year after year. It’ll also save you the hassle of having to get rid of it once January rolls around. If you’re dead set on a real tree, why not go for a smaller size to save some money?

If a plastic tree offends your eco-friendly sensibilities real trees are a good way to balance saving money and sustainability. I asked Matt Jones, our Home and Garden expert, who owns own an allotment, for this thoughts:

"Instead of buying a cut tree, buy a live tree with roots and couple of pots. A real tree with roots will cost just a little more than a cut tree, about £50-80, depending on the size.

You can then use it for at least a few years, as long as you keep it alive. You'll need to keep your tree well watered so it doesn't dry out - so you'll also need a big plant pot saucer to put your pot in. Be mindful of any electric lights and sockets when watering. Re-pot it each year if possible, and remove the top layer of soil and replace it with new compost. We've had our Christmas tree for 3 years, it cost £50 so I estimate it's saved us at least £100."

If you like something new each year, rather than buying your decorations in November or December, why not buy them in January? After Christmas, stores tend to offer big discounts on all their Christmassy stuff, including decorations, which means your money will go much further.

Keep an eye out for the best deals and discounts year-round

There’s nothing to stop you from starting your Christmas shopping earlier in the year. Lots will inevitably leave their shopping until the last couple of months of the year, but why not get in there and shop early? January is great for bargains (especially for nabbing cheap Christmas cards), the summer is a haven for sales and there are always juicy discounts to grab on Black Friday.

There are also other ways to pay less. Here at Savoo, we have a huge database of up-to-date voucher codes you can use at many of your favourite retailers. So you could save on gifts for others (or yourself, why not?) at retailers like Currys, Boots, Dunelm, Wayfair, Ninja Kitchen and more.

Do some DIY

A great way to save and get stuck into something fun and crafty is by making things for yourself. This could be making gifts for family members, like a box of scrummy Christmas cookies, or knitting scarves or gloves to keep pinkies and tootsies warm. It’s a great way to personalise your gift and show someone how much effort you put into it.

Another way to do things yourself is by making decorations. Bunting, baubles, models, artwork, tinsel… there’s loads you can do. You can also involve the kids which gets them engaged and keeps them out of trouble for a bit!

Save money on Christmas grub

For many, Christmas dinner is the best meal of the year. Turkey, stuffing, pigs in blankets, roast potatoes, cranberry sauce… we’re drooling at the thought of it just writing this. The thing is, all the things that come together to make Christmas dinner so special means it’s also pretty expensive.

It’s understandable that you might not want to compromise, but there are ways to still have a delicious dinner while spending a little less.

Why not buy frozen vegetables a couple of months before December? Or, you could buy fresh veg, prepare it the way you like it, and bung it in the freezer so it’s ready (and saves you a job on Christmas Day). Buying a frozen turkey crown is often also a cheaper option if you don’t fancy subbing it out for a more affordable alternative like chicken.

In the event you make too much (it’s inevitable, right?), make sure you don’t throw any food away. You’ll no doubt pick at the turkey on Boxing Day and beyond, but why not repurpose it and freeze it to have in January? Turkey curry is delicious, just give it a try! Or why not blend up some veg into a hearty and warming soup? Perfect in the depths of winter.

Try to avoid getting into debt

We get it, there are people you love who you simply have to spoil. There’s a lot of pressure around Christmas, which means it can be very easy to spend more money than you have. Putting the odd gift on your credit card here or there might not seem too bad to begin with, but it can soon add up – and then the interest adds up further, and that means your savings for next Christmas take a hit when you can’t save as much because you have to pay it off. It’s a vicious circle. Read our guide to Christmas gifts on a budget for more ways to save and still treat your nearest and dearest.

Always do what you can to stick to your budget. Christmas is magical and fantastical, but it’s not worth getting yourself into financial difficulties over. Resist the temptation to get yourself into debt and try to find ways to spend less instead. If you're treating the kids, check out our Christmas spending statistics for parents which has helpful budgeting tips.

Discover new ways to save for Christmas

Even though it can be expensive, money shouldn’t have to stop you from having the most wonderful time of the year. Now that you know how to save money for Christmas, there are small changes and tweaks you can make to save and slash holiday spending while keeping the magic.

For a simple and effective way to cut costs at Christmas and throughout the year, browse voucher codes at Savoo and spend less at loads of your favourite retailers.