How to save money at Christmas 2024 and New Year's 2025

The holiday season, including Christmas, New Year’s, Hanukkah, and Kwanzaa, is typically a time of gift-giving, dinners, parties, and celebration, but all of this can bring added financial stress, particularly during the continuing cost-of-living crisis. In 2023, research reported by the Guardian found that the cost-of-living crisis has even changed the way we celebrate, including parties at home and alternatives to the traditional Christmas dinner.  

This time of year can have benefits for our mental health, but it’s important that we approach the season in the right frame of mind and consider our finances. If we approach the holiday season with the right plan, it’s a great way to set us up for the new year and beyond.  

For the 2024 holiday season and beyond, we've compiled a list of tips and advice for saving money during the festive season. 

How to budget for Christmas 2024

1. Work out a budget, then stick to it

We often want to go above and beyond at this time of year, giving our loved ones a truly magical time even when it might not be within our means. It might help to work out a budget using our budget planner, or our general tips for managing your money and mental health. Once you’ve calculated your budget, you can prioritise who to buy presents for and who you might be able to skip.

2. Agree to spending limits

If skipping presents isn’t possible, you can agree to mutual spending limits that are within your shared means. This way, you can feel safe in the knowledge that you’re not overspending or underspending compared to your loved one. Having a limit can also help direct what you purchase. You might feel anxious or worried about having a conversation about money, but you can prepare yourself by reading MoneyHelper’s tips on having conversations about money.

3. Keep an eye out for discounts and freebies

Once you’ve set a budget, keep an eye out for deals and freebies that might help you stretch your money further. For example, websites offering free photo prints can make for a great personal gift for your loved ones. We recommend you keep an eye on MoneySavingExpert’s deals page for ideas.

4. Avoid Christmas savings clubs

Christmas savings clubs may seem like a great idea, but they aren’t without risks. Christmas savings schemes aren’t regulated in the way that banks and building societies are, they likely won’t offer interest on your savings, and if the scheme goes out of business, you could be at risk of losing the money you put into the scheme. You may also get your money back in vouchers, which offer limited places to spend your savings.  

Instead of Christmas savings clubs, you can save your money in a savings account at your bank, or with a credit union. Both these offer higher interest rates on your money and could net you a little extra. 

5. Think twice about borrowing money

You might be tempted to borrow money in order to fund the Christmas period, but debt can create added stress on your mental health. As much as we might want to borrow money and deal with the consequences later, think about ways you can save money instead while still making the season memorable. 

6. Sell unwanted items

Take a look around your house for things you aren’t using. Old electronics such as phones and tablet computers often hold unexpected value, even if it’s a fraction of the price when you originally bought it. Not only can selling unwanted items help to fund the purchase of Christmas presents and Christmas dinner, but it might also help others find presents. Selling unwanted possessions you weren’t otherwise using can be a great way to bolster your budget. It’s worth repeating this regularly, too, after Christmas has passed. Sites like eBay and Facebook Marketplace make it easy to sell online.

7. Look for ways to save money on Christmas dinner

If you’re planning a family meal, look for ways to save money. According to Respect Food, the highest food waste happens at Christmas with over half of Brits saying they spend more money on food than they should during this time of year. Not only is this an environmental concern, but with the average UK household spending £169 on food at Christmas, it’s possible to save money purely by buying only what we need. Consider how many guests you expect to have, consider their dietary requirements, and only buy what is truly necessary.   

This might feel like a big task that could make you feel worried or anxious. If you feel overwhelmed, try breaking it down into smaller tasks and take each small task on one at a time. For example, you might start by just planning what you are going to have on Christmas Day.   

There are other ways to save money. You can also keep an eye out for deals, or consider chicken as an alternative to expensive turkey. You can even use MySupermarketCompare to check prices for the cheapest deals.

Money-saving present ideas for Christmas

1. Organise a Secret Santa for large groups

It can be difficult to shop for large groups of people if you’re on a limited budget, but suggesting a “Secret Santa” can be a great solution. Everybody agrees on a budget, adds their name to a hat, and then pulls one name at random. Then, you keep whose name you pulled a secret. Secret Santa takes the practice of setting a fixed budget and adds a little fun mystery to the festivities. And, this way, nobody feels the pressure to overspend, and everybody gets a gift of approximately equal monetary value.

2. Second-hand presents

It might seem odd to give somebody a second-hand gift, but charity shops often include new and unused items and used items in good condition. Vintage items can make for great gifts. Buying from charity shops means your money will go to a worthy cause. You might have to put a bit of extra time and effort into finding a second-hand gift, but focusing on a task can be really good for our wellbeing, so you might even find this helps your mental health.

3. Gift or care vouchers

Handmade gift vouchers are a fun alternative to expensive gifts, allowing you to do something nice for somebody without spending money. For example, you can create a voucher for a homecooked meal, a walk in the park, chores – anything you can imagine. These can be as simple or as complex as you like – written simply on a piece of cheap card, or hand-designed and artistic. Giving to others is one of the "five ways to wellbeing" so a gift like this might also improve your mental health.

4. Consider not giving presents this holiday season

We often feel bad for not giving somebody a present during the holiday season, but with large families and circles of friends, it can be difficult to be able to afford to buy everybody a present. Consider having a conversation with loved ones about the cost-of-living crisis and propose that you mutually skip presents this year. A mutual agreement ensures nobody will feel bad for overspending or underspending, and it allows you to propose an alternative like spending quality time together.

5. Homemade or home-baked presents

If you’re crafty or you love to bake, homemade or home-baked presents are a great way to save money while also giving a truly special present. Whether you love to knit, crochet, paint, or bake, use your creative skills to the fullest and give something you can’t buy on the high street. You might also consider sharing these skills with loved ones, perhaps combined with the homemade gift vouchers above to provide lessons for a loved one in your chosen skill. You might even want to try to learn a new craft to make a gift, as learning a new skill is also one of the five ways to wellbeing!

6. Take advantage of the January sales

If you’re able to do so, ask loved ones if they would mind having a gift-giving session in January. That way, not only are you able to extend the fun a little past the new year, but you can also purchase presents in the January sales and save a little money.  Even if you don’t do gifts in January, how about making plans to meet up with loved ones anyway? Connecting with people we love is great for our wellbeing and we shouldn’t need to wait for an excuse to spend time with friends and family. 

Ultimately, we understand the pressure to please loved ones and give children the “perfect” Christmas, which can lead to overspending and debt. That’s why we recommend some general tips that apply not just to this time of year, but to the whole year.  

It might be helpful to know that the average household Christmas budget is around £350, including food, decorations, presents, travel, and so on. Knowing this, you can use our budget planner to work out how much you need to save for bills and food, then account for saving for occasions such as birthdays and Christmas. This way, you can enter the holiday season with your budget already set.  

It might feel uncomfortable but try to talk openly to loved ones about any financial worries you might have. Our conversation guides to talking to young people and loved ones about financial worries might help you navigate the conversation. At the very least, use these conversations to set a mutual budget you feel comfortable with following.  

Debt can happen to anyone, but it can be avoided. Don’t take out unnecessary loans, even if you’re intending to use the money for Christmas presents. If you’re already in debt, you can read our guide to dealing with debt.  

We hope our tips for saving money at Christmas and New Year’s help you to manage your finances at this time of year. No matter what your plans are, from all of us here at Mental Health and Money Advice, we wish you a happy, healthy, and restorative holiday season.