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Monday 12th September 2022
What's it all about?
This article's designed to help you:
To slap some hard numbers on this, the International Monetary Fund (IMF) announced it was expecting UK inflation to average out at 10.5% in 2022. That's a big leap up from the 7.8% estimate it gave out just a few months earlier. Essentially, inflation means the pound in your pocket is dropping in value, and when the rate's high then everyday costs get harder to meet. With Christmas traditionally being a time when we all splash out a lot more, it makes good sense to start spreading those costs out as much as we can.
Price comparison site Finder.com reckons that the average cost of Christmas is set to hit £1,023 per household this year. Given the typical 2022 family income after tax of £1,926, that means we'll be blowing over half what we're earning during the festive season on our Christmas shopping alone! All told, taking account for inflation, the country as a whole's probably looking at a total Christmas shopping bill of close to £7 billion for December 2022 alone, with many of us already months into our gift-buying by then. So who's spending all this cash, and what are they getting for their money?
Averaging it all out, a typical British household will splash out something like £2,500 per month. According to statistics from the Bank of England (which likes to keep a close eye on things like this), that figure snowballs up by another £740 in the month of December—close to a third higher. Obviously, averages like that doesn't paint the whole picture. Depending on where you live in the UK, your likely costs could vary up or down a fair bit. In London, for instance, the typical Christmas spend was a whopping £1,746 per person in 2021! At the other end of the scale, people in the North East were spending around £994 each on average that year. That's still a lot of money to lay down, obviously, but it should give you an idea of the ranges we're dealing with.
As for where all that cash is going—again, the Bank of England's taken a close interest in this. UK spending on books, music and video recording equipment basically doubles in December. Computer and phone sales jump up by over 60%, while the amount we're blowing on drinks (alcoholic or not) and tobacco rises by 38%.
There's other stuff that goes down at the same time, though. For instance, December tends to see a pretty sharp drop (just over 20%) in things like paint and hardware. Chances are, this comes down to people putting off all those little DIY jobs around the house until after the Christmas decorations come down.
So, what does all of this add up to? Here's a quick run-down of what a typical British Christmas is looking like in financial terms:
Make this Christmas a cracker with our festive budget planner. Download it for free today, no email address required!
Okay, so we've got a broad idea of what a standard Christmas is likely to cost us. How do we take control of those costs to make sure we don't spend the New Year neck-deep in debt? We've talked about making budgets in our guides before, and saving up for Christmas really isn't all that different from saving for any other large costs, like a used car or a house deposit. The key is to work out exactly how much cash you reliably have coming in, and to divide it up into your essential costs, your "fun money" and your savings. It's called the 50/30/20 rule, and it's the foundation of a really strong budget. You can get a head-start on your Christmas planning with our free online tool to show you how the system works.
Free tool: Christmas Budget Planner
Meanwhile, it'll be well worth your while considering other ways to bring your Christmas spend down a little.
1) Plan ahead and manage expectations
Ideally, you ought to make a list (and check it twice) long before you head out to the shops or click on the Shop Now button. If nothing else, you could save a packet on your parcels if you're doing a lot of your buying at the same site. The more you buy at the same time, the easier it is to hit that magic free delivery target. While you're planning, consider setting a maximum spend with your friends and loved ones. Agree a figure in advance and stick to it. It'll save you from overspending—and avoid any awkwardness around the Christmas tree at the same time.
2) Lay off the plastic, unless…
The temptation to dump your whole Christmas on a credit card can be intense, but if you can avoid doing that you'll probably end up a lot better off. However, if you play the game well enough, there can be a plus side to whacking down the plastic once in a while. If you scout around for the best 0% interest deals on your cards, you can spread your Christmas shopping over a few months without racking up a load of plastic debt along the way. It takes a little legwork, but the pay-offs can be good. Just don't forget to clear your balance before the 0% deal expires and the interest starts piling up!
3) Check out the cashback sites
If you do most of your Christmas shopping online, then there's an interesting little wrinkle in the online sales landscape to look out for. A cashback site is a web page that will basically toss a little money your way when you pass through them on you way to your seller. You sign yourself up for a free account (and definitely avoid any that ask you for money up-front), then search the site for a seller you want to buy from. When you click through and make your purchases, the cashback site drops some credit into your account. The amounts are generally pretty small, but you're not buying anything you wouldn't have bought anyway and the benefits will stack up over time.
Keep checking back here for more money tips and updates. We’re experts at saving you cash and we’re always here to help. That’s the reason why you’re better off with RIFT.
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