How to save money for Christmas: 27 tips to save for the festive season

Need to know how to save money for Christmas? Follow these tips to help you afford the festive season for your family

Christmas coin jar with Christmas lights behind
(Image credit: Getty Images)

More and more cash-strapped parents will be wondering how to save money for Christmas during the cost of living crisis. 

It’s been a year of huge price hikes on everything from energy and mortgages to food and fuel, and many family budgets have been squeezed hard. Knowing how to save money (opens in new tab) can go some way to easing the pressure, but it can be increasingly difficult around Christmas when we usual spend more than we would at any other time of the year. 

Research by parenting website Mumsnet (opens in new tab) found that 68% of parents are more worried about the cost of the festive season than they would normally be. Justine Roberts (opens in new tab), Mumsnet chief executive said: “We knew from our forums that, like families across the country, Mumsnet users are struggling with the cost-of-living crisis.

“But we were shocked at the level of fear and apprehension that this research revealed. Mums told us repeatedly that rather than looking forward to the festive season, they are – in their words – “sick with worry” about the cost of Christmas.“ 

While knowing how to make extra money (opens in new tab) may help cushion the blow this Christmas, we've also come up with a host of tips to help you afford the festive period. 

How to save money for Christmas

Follow these tips to ease some of the pressure on paying for Christmas for your family. 

1. Work out what you can afford to spend

Budgeting (opens in new tab) is the most important step. Without a firm idea of your budget, it’s easy to get caught up in the Christmas hype and overspend. Take a look at how much money you have coming in from any wages or benefits, and take away how much you spend on your essential bills including any mortgage or rent payments, council tax, energy bills and so on.

Once you know how much you have to spend, even if it’s not much, you can then come up with a plan that matches your budget. 

While working out your budget, it's also worth looking at what payments are coming out of your bank account. If you have any subscriptions you no longer use then make sure you cancel them, so you can put the money to better use. 

2. Prioritise who to buy gifts for

Christmas tends to bring out everyone’s generous side, but in the middle of a cost of living crisis, this can be a slippery financial slope. Write a list of everyone you usually buy gifts for, and then circle the names you have to buy gifts for. This might just be your immediate family rather than friends or other relatives. 

For those whose name you didn’t circle, speak to them and suggest that, as costs have been going up for everyone this year, you don’t buy presents for each other. Chances are, your friend or family member will be feeling exactly the same way and happy to reduce their Christmas spending too. 

You could always plan to do a free or inexpensive activity together instead. 

3. Set a spending limit on the gifts you do buy

At Christmas, it really is the thought that counts. Speak to those you normally exchange gifts with and agree a spending limit. Everyone has been impacted by the cost of living crisis, so even if they haven’t suggested it themselves, they’re likely to be on board with the idea. 

When buying presents for kids, set yourself a limit of what you can afford to spend and stick to it. 

4. Make lists and stick to them

It’s really easy to get caught up in Christmas hype, but it can be dangerous for your bank balance. Planning purchases ahead of time gives you time to carefully consider them, check prices and budget for them. 

Try writing two lists, one for Christmas presents and decorations and another for Christmas food. Write prices (or how much you are willing to spend) next to each item, then prioritise the list by what you need versus what you want. 

But the lists will only help you stick to a budget if you stick to them and avoid getting caught up with impulse purchases on things you don't really need. 

Lists are also really useful when trying to find bargains in the sales, so it's a good habit to get into if you want to avoid busting your budget.

5. Start a Christmas cupboard (or box)

Planning is key when it comes to saving money on Christmas presents.  Leaving everything to the last minute and dashing out hoping to buy the lot in one go is more likely to mean you’ll end up buying overpriced items in a mad panic to get the job done.

Stock up on small stocking filler gifts when you see them and stick them in a special cupboard or drawer.  Anything left can be used for birthdays so even if you buy too many items – they won’t be wasted!

This can be really useful if you find your self buying anything in a 3 for 2 or buy-one-get-one-free sale. Keep hold of all those unintentional things you get for free, and you could have a selection of items ripe for gifting. 

What to keep in your Christmas box or cupboard:

  • Any unused presents you've been given and don't need to want
  • Anything extra you get in a 3-for-2 or 2-for-1 deal
  • Any presents you may have bought throughout the year
  • Any leftover Christmas wrapping paper or tags
  • Any gift bags you have been given over the year that can be reused. Remember to check for any tags that may have personalised messages on them. You can always cut them off before using the bag again.

6. Agree to do a Secret Santa

A Secret Santa is a great way to go Christmas on a budget. This way everyone buys one gift rather than multiple gifts.

Personal finance expert Adam French (opens in new tab), from our sister site The Money Edit, says: "Christmas doesn't have to stretch your household budget to breaking point. Making simple changes like opting for a Secret Santa as a family instead of buying everyone a gift can give your finances all important breathing space.” 

But do make sure everyone involved agrees to a spending limit to keep things fair. You can always suggest that people write their own names as well as some suggestions of what they might like as a gift to put in the Secret Santa. This can help to make sure that any money spent on presents goes towards something they would really like or need rather than something they may not get use out of. 

7. Re-gift unwanted presents

Throughout the year, you and your family may have been given presents that, for whatever reason, you’ve not used. These are perfect to be re-gifted to other people. Not only does it massively cut down on your spending, but it’s also good for the environment. Recycling and re-gifting is the thrifty way to do Christmas!

8. Cash in loyalty points

If you have been using a loyalty card when shopping throughout the year, you might have quite a few points available that you can put towards your Christmas shopping

Money expert Kalpana Fitzpatrick, digital editor of our sister site MoneyWeek (opens in new tab), says: “Loyalty cards can be a great way to give your Christmas budget a boost by helping you pay for gifts or reduce your groceries bill” 

“See what you already have on your cards and make sure you use those cards for all the places where you shop regularly - start collecting and saving now. 

"My tip is to either use the digital wallet app on your phone or the Stocard (opens in new tab) app to store all your loyalty cards - that means you always have the cards at the ready and will not miss out on points. It also means a lighter purse!”

With some schemes, like Tesco Clubcard (opens in new tab), instead of paying with points at the till, you can exchange points for up to three times their value through the website. This can mean big savings on gifts like annual memberships, days out and even cinema tickets.

9. Shop around and check prices

For anything on your shopping list, make sure you shop around and make sure you’re getting the best price. It takes time, but this can be a good thing. The more you research, the more you will consider your purchase so it’s a great way to avoid impulse buying. 

It’s worth using a price comparison site to shop around for you like Kelkoo (opens in new tab).

Another top tip for shopping around is to check the prices of different colours of the same item. This is especially the case if you are looking to buy any tech items like a smart speaker or phone. Sometimes you will pay significantly more for the more popular colours, while less popular versions are cheaper. But this can even be the case for clothing and homewares too. 

10. Buy second hand

Lots of people tend to have a clear out at home before the Christmas period, especially if they plan on having guests come to stay. That means that in the lead up to Christmas you can find some great second-hand items.  Check out charity shops and eBay for Christmas present ideas at a fraction of the price. 

Buying second-hand is also a really sustainable way of shopping so you can be proud that you are doing your bit for the planet, as well as for your bank balance. 

11. Check out sales but be savvy

In the lead up to Christmas, many retailers hold sale events that are worth checking out. Black Friday falls at the end of November, and some Boxing Day sales actually start before Christmas. While Amazon Prime Day (opens in new tab) tends to happen in late spring or early summer, this year the mega retailer is also running a two-day discount event (opens in new tab) on 11 and 12 October - which could be an opportunity to save money this Christmas with Amazon (opens in new tab).

But while the idea of discounts is hugely tempting, it's important to think ahead about what you need to buy and how much you can afford to spend. 

"Stick to a budget and shopping list as much as possible. You'll be bombarded by sales and special offers in the run up to the big day, but research has found time and again those deals are rarely any more special than any other time of the year, “ warns personal finance expert Adam French.

According to Which? research (opens in new tab), a massive 99.5% of items on sale during Black Friday 2021 were actually cheaper at other times of the year.

12. Look out for voucher codes and coupons

When you’re shopping online it’s always worth trying to track down a voucher code or coupon to slash the price.  

No need to spend hours trawling online -  easy way is to download Pouch (opens in new tab) or Honey (opens in new tab) that do the hard work for you by searching for discounts for the sites you’re on.

You can also check out available codes through our sister site MyVoucherCodes (opens in new tab)

13. Use cashback sites

If you've never used one before, you might be wondering how do cashback sites work (opens in new tab) - but they are surprisingly easy to use. Earn as you spend by signing up to a cashback site like Quidco (opens in new tab) or TopCashback (opens in new tab). Once signed in, you then go to your chosen retailer's website from the cashback site to earn a bit of money on whatever you spend. 

You can even download the TopCashback free browser extension (opens in new tab) – this instantly flags up any cashback you can earn for the site you’re on so you don’t miss out.  It's free to join and any money earned can be swept into your bank account to boost your Christmas fund.

14. Be careful about putting purchases on a credit card

If you have a credit card, it can be tempting to use that for all your Christmas shopping and worry about paying it off later. But if you can't pay it off, you could face hefty interest charges and late fees which can put you in a difficult financial situation in the new year. Debt you can't repay could also impact your credit score which makes it harder or more expensive to borrow money in the future. 

If you want to use a credit card, use a credit card eligibility checker (opens in new tab) like the one from our sister brand Go.Compare, and see if you qualify for a 0% balance transfer card. 

With a 0% balance transfer card, you can transfer debt from a credit card where you have to pay interest (known as APR (opens in new tab)) to one where you don't. You'll likely only have a certain amount of time to benefit from interest-free payments and you'll need to make the minimum payment each month. But it can be a suitable way to spread the cost of Christmas. 

15. Avoid paying delivery fees where you can

Delivery charges can eat into your budget so it's a good idea to avoid paying them unnecessarily. If you don't need your shopping urgently, then often you can get free delivery if you are happy to wait a bit longer for your parcel to arrive. 

In other cases, you'll probably find that you can only get free delivery if you spend a minimum amount. This is where it helps to have planned your shopping list. Group together all the items you need to buy from that retailer and buy them in one go if you can afford to (or so you at least meet the minimum value to qualify for free delivery). 

When it comes to Amazon, unless you’re signed up to Amazon Prime (opens in new tab) or your basket is over £20 and qualifies for free delivery, you may have to stump up for the delivery fee.

If you’re only a couple of pounds short - bump up your trolley to the £20 level by searching for small low cost items with this Super Saver Delivery Tool (opens in new tab) to save on delivery.  It might be a pack of sweets or a notepad but if spending £1 saves £5 in delivery –  it’s worth it!

Don't forget you can also click and collect your purchases to avoid delivery charges altogether. 

16. Make inexpensive gifts at home

If you have the time, you can always try making gifts at home, and you can even get the kids involved. 

Making your own biscuits or Christmas decorations, especially if you can make them in a batch, can be a really thoughtful gift that doesn't break the bank. 

Other ideas of gifts to make a home include:

  • DIY body scrubs - you can make a great citrus-flavoured one by combining coconut oil, sugar and the zest of an orange
  • Homemade wall art in an inexpensive frame
  • Homemade rice handwarmers
  • DIY paperweight
  • Homemade candles
  • Homemade Christmas decorations using dried fruit
  • Delicious homemade fudge 
  • Kids will love homemade slime.

Homemade Christmas decorations on wooden table top

(Image credit: Getty Images)

17. Use up old gift cards

Some gift cards have a limited life span of one to two years so if you’ve got some  lying about, then dig them out and use them to pay for your Christmas purchases.

Be wary of passing them on as gifts, especially if they’re unused, as any time limit may start from the date of purchase. If you were given the card, you may not know when it was bought and could pass on a card with just two months to run before its expiry.  

With some stores, you can go online and pop in the gift card number to see how much time you’ve got left to use it if it is not noted on the card itself. Alternatively you can pop into the store and ask them to check for you.

18. Keep track of deliveries you are expecting

If you have made multiple purchases online, keep a note of what you have ordered and when it is due to arrive. That way, if anything doesn't arrive, or is missing from your order, you can get in touch with the retailer and get your money back. 

Goodto.com's Money Editor Sarah Handley (opens in new tab) said: "With so much going on in the lead up to Christmas, you might forget about an online order you made and find yourself out of pocket. Keeping a list will help you keep track and mean that you can get straight on to the retailer about any missing items and sorting your refund or a replacement as soon as possible."

19. Buy a brand level lower when it comes to food

When it comes to Christmas food, try buying a brand level lower to see if you can save on your food shopping. In most cases you won't be able to taste the difference, but your bank account will certainly appreciate it. 

Also think carefully about what you plan to cook for Christmas Day. Do you need an expensive turkey or prime cut of meat? If not, then opting for cheaper alternatives is a good idea. 

Similarly, if you always buy a massive turkey and eat the leftovers for days, or even end up throwing a good portion of it away, then try buying a smaller bird instead to save some money. 

Other ways to save on food at Christmas:

  • Buy frozen
  • Look out for deals on festive favourites like mince pies or boxes of chocolates
  • Cook from scratch
  • Avoid pre-chopped or pre-prepared items. 

20. Book any activities in advance to get the best price

At Christmas time there are loads of activities that are great for kids, including pantomimes, Christmas light switch-ons, and visits to Santa - but the price of these activities can quickly tot up. 

While you might decide to cut down on the number of activities like this you book to keep costs down, for the ones you do want to attend, make sure you book in advance to get the best price. Early-birds tend to get preferential pricing that is a fraction of the full-price paid by those on the day of the event.

Booking in advance is also worthwhile if you plan on travelling anywhere by train over the festive period. Check out these other ways to find the cheap train tickets (opens in new tab) and save money. 

21. Think 'little and often' when it comes to spending and saving

Paying for Christmas out of one month's income can leave you really strapped for cash even as you move into the new year. 

If you can, start buying presents or supplies early and storing them in a box, drawer or cupboard until you need them. This can help to split costs over multiple months which can make it much easier to manage your budget. 

This idea also works when it comes to saving money. Whatever you are able to save each month, put aside and try not to touch it. You could open a savings account with your bank and keep it in there - it could even earn some interest over the course of the year. By saving little and often, you can have a nice little pot of cash to spend on Christmas. 

22. Get creative with your gift wrapping

When it comes to gift wrapping, you might need to get creative to save some money. Gift bags might be convenient, but they are expensive to buy compared to wrapping paper.

But for really low cost present wrapping, consider making use of any free newspapers you might get through the door. Collect them in the weeks leading up to Christmas to use as free gift wrapping. To make the wrapping feel more festive, you can always pick up a roll of twine or ribbon in festive colours to wrap around and make a bow. 

Not only will this avoid spending money on something that is only going to be thrown away, newspaper is recyclable so you'll be doing your bit for the planet too. 

23. Try the 1p savings challenge

Turn pennies into pounds by trying the 1p savings challenge (opens in new tab) which can boost your bank balance by £667.95 in a year. Lots of people like to start this challenge on 1 January, but you can start it at anytime. 

And with some banks and building societies like Nationwide (opens in new tab), Halifax (opens in new tab) and Lloyds (opens in new tab) you can choose to have debit card purchases rounded up to the nearest pound with spare change sent to a separate savings account.

24. See if you qualify for a Help to Save account

Thinking ahead for future Christmases, it's worthwhile checking to see if you qualify for a Help to Save (opens in new tab) account. 

Help to Save is a government-backed scheme that helps those on a low income to save money. For every pound saved into a Help to Save account, you can get a bonus of 50p. The bonuses are paid after you have had the account for two, then four years, so while it might not help for this Christmas, it's well worth considering to ease the pressure of future Christmases. 

Mother and baby sat on sofa at Christmas with mother looking at bills and using a calculator

(Image credit: Getty Images)

25. Try a supermarket savings club

A supermarket saving scheme could also be a good option to help you save for the festive season. One of the UK's leading consumer rights experts, Martyn James (opens in new tab), says: “Supermarkets offer a range of saving schemes for Christmas, allowing you to buy stamps towards the big day, save up loyalty card points and pay cash in to get extra points and bonuses too. But make sure you check to see how you redeem the points and how much you have to spend or pay in to get the bonuses.”

Both Asda and Iceland offer year round savings schemes with an annual boost of up to £15. With Iceland (opens in new tab) you get £1 for every £20 you stick on your savings card, plus an annual bonus of up to £15. With Asda’s Christmas Savings Card (opens in new tab) you can earn an extra £15 in the run up to Christmas.  

Check websites for details of how much you need to pay in and when to qualify for the bonuses.

26. Tune out how much others might be spending on Christmas

It can be really difficult to try and cut down on Christmas spending if you are hearing about how much others are spending, or seeing huge piles of shopping bags on social media. 

Always remember your budget and the reason for setting it. Longer-term financial health is much better than single budget-busting day. So try to keep that mantra in your mind as you tune out what other people might be buying or how much they are spending. 

If you are feeling pressure from influencers on social media, try muting notifications or temporarily unfollowing those accounts until the new year. 

27. Make extra cash by decluttering

Boost your Christmas spending power (and free up some space at home) by decluttering and selling what you no longer need or use.

Knowing how to sell your old gadgets (opens in new tab) means you can boost your budget by more than £100 depending on what you are trying to sell. Making sure you know how to sell clothes online (opens in new tab) is also a really good skill to have and can be a great way to earn some extra money.