Payset prespective
December 11, 2023

How to Afford the Cost of Christmas

Celebrations provide opportunities to bond, create memories, and enjoy milestones. The Christmas season especially gives people who celebrate a chance to forget their problems and focus on the good times.

As 2023 draws to a close, the escalating cost of living crisis has made it harder to justify lavish expenses and mark the festive season in traditional ways. At the time of writing, the Consumer Prices Index (CPI) increased by 4.7% in 12 months, affecting prices of many items often bought over Christmas, including food, alcohol and clothing.

We recently conducted a survey and found that only a third of UK adults were not concerned about their Christmas spending. However, everyone deserves a celebration, no matter your financial situation. Keep reading for tips on carefully managing your money through the festivities.

Budget and Prioritise 

While celebrations are an important part of our lives, the financial pressure they can cause is becoming more pronounced. Many who celebrate Christmas are having to re-evaluate their spending to get the best value for money and avoid unnecessary costs.

When budgeting for Christmas, consider:

  • Setting price limits for presents
  • Organising a Secret Santa to minimise your gift-buying
  • Calculating the amount of money you can afford to spend
  • Having honest conversations about financial limits
  • Cutting inessential costs (e.g. new party clothes)

The urge to overspend during the festive season is tempting, but it’s not worth the strain you’ll face in January. Being realistic about what you can afford might change how you celebrate, but a pared-back Christmas could create a much more meaningful experience.

Plan and Save

Getting organised with plenty of time will help you navigate the cost of Christmas and avoid last-minute stress. Our survey revealed that saving through the year was the most popular way to pay for Christmas, with almost a quarter opting for this option. Another 23% of respondents said they spread their purchases over several months to help them afford the festive season.

As we have seen in the last couple of years, numerous micro and macroeconomic factors can push prices up. For example, the cost of a Turkey rose by 45% last year — way above the usual inflation rate — due to an outbreak of bird flu. This price hike impacted the cost of Thanksgiving and Christmas, which shows how saving in advance can help you cope with unexpected festive spending.

Shop the Sales

Over the lead-up to Christmas, there are many retail offers, including Black Friday and Cyber Monday, to take advantage of and help minimise your spending. In our survey, 17% of people said they shopped the sales to help them afford festive spending.

However, it’s easy to get caught up in the pressure of sales and spend more than you can afford. To stick to your budget and avoid impulse spending, plan what you want to buy before these offers are available.

If you’re thinking even further ahead to save cash, shop the January and Boxing Day sales for the following Christmas. While deciding on personal presents this far in advance is tricky, you could use these sales to buy cheaper gift wrapping and decorations. If you have any present ideas throughout the year, keep an eye out for other offers, such as summer sales.

Alternative Payment Methods

If you’ve not been able to prepare a Christmas budget ahead of time, you could consider different payment options that allow you to pay off costs gradually rather than in one big payment.

In our survey, almost one in six said they used credit cards to get through the festive season, and 1 in 20 used Buy Now, Pay Later (BNPL) services, such as Klarna and Clearpay. While these methods can alleviate pressure in December, it’s easy for debt to build if you don’t consider the long-term impact.

It’s crucial to use these options responsibly and with careful planning to ensure you can pay off your debt in good time without racking up heaps of debt. Also, ensure you have researched the best option for your situation — consider factors such as interest rates, incentives and your credit rating.

Additionally, many shopping reward programmes allow you to trade in points for vouchers to use in restaurants and retail stores. Certain shops also offer vouchers as part of a recycling scheme.

Get Crafty this Christmas

The financial challenges of the current climate have brought about a surge in creativity when it comes to celebrations. More people are turning to DIY solutions, from handcrafted decorations to homemade baked goods and cocktails.

Of course, making presents is another excellent option for reducing your costs. Depending on your skills, you could create something the recipient will get a lot of use out of, such as gloves, or remind them of a memory you shared by decorating a frame for a beloved photo of you together.

Celebrations are becoming less extravagant and more about personal, heartfelt gestures — ‘it’s the thought that counts’. In a previous study, 74% agreed giving and receiving meaningful presents was more important than how much you spend.

This shift in thinking helps to alleviate financial pressure and brings us back to the true essence of celebrations — the joy of togetherness and shared experiences.

Second-Hand Shopping

Regifting presents or giving somebody a used item has previously been frowned upon. However, recent years have seen a rise in resale platforms such as Vinted and Depop, making second-hand shopping much more common. In our survey, nearly one in 12 people said they were shopping secondhand to save money.

Buying preloved gifts can require even more thought and creativity, resulting in a heartfelt present that your recipient will appreciate. Statista found that books, clothes, and accessories were among the most popular items to buy secondhand. It isn’t just gifts you could purchase secondhand either, with tons of partywear options available across the resale apps.

According to Depop, you can save up to 25% per item when shopping secondhand. To earn extra cash for your Christmas spending, you could list your own items, too. Depop found that 18-35-year-olds in the UK could pocket an average of £535 extra a year by buying and selling secondhand fashion. Research from Kathryns found Facebook Marketplace and eBay were even more lucrative for selling old children's wear.

Look to Your Community

Local organisations, charities, and community centres are stepping up to offer assistance by hosting affordable community celebrations, organising gift exchanges and even offering free event spaces. These initiatives aim to ensure everyone in the community can celebrate, regardless of their financial situation. 

If you need a helping hand this year, there are countless examples of communities coming together to support one another during tough times and ensure people don’t miss out on celebrating.

Consider a Digital Celebration 

In the era of advanced technology and connectivity, digital celebrations have gained significant traction. Virtual gatherings, online parties, and video calls have become the norm, allowing people to celebrate with loved ones from the comfort of their separate homes.

This trend saves travel and accommodation expenses and offers a convenient and inclusive way to spend time with people across geographical barriers. The overall cost of travel is up 10% from pre-pandemic to now, so this option helps to cut costs and avoid missing out on festivities with relatives and friends in different locations.

As we leave 2023, the rising cost of living is undoubtedly impacting the ability to celebrate in familiar ways. However, the price tags don’t need to define your celebrations. You can adapt to changing financial landscapes and still celebrate in meaningful and affordable ways by embracing thrifty shopping tactics and getting organised.

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Frequently asked questions

What is a multi-currency account/virtual IBAN?

A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.

You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.

A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.

  • Funds can be deposited and withdrawn from the account for a small fee.
  • Account holders can send and receive money with other Payset users for free.
  • Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS. 
  • Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
  • We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days

Are there limits on the amount of money I can send and receive?

No, there are no transaction limits on Payset multi-currency accounts.

However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.

How is Payset regulated?

Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).

How do I send money from my account?

Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.

Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.

Information contained in this publication is provided for general education and information purposes only and should not be construed as legal, tax, investment or other professional advice or recommendation, or an offer of, or solicitation for, any transactions or any other actions (or refraining therefrom); This material has been prepared without taking into account any particular recipient’s financial objectives or situation. We make no warranty, guarantee or representation, whether express or implied, as to the completeness or accuracy of the information contained herein or fitness thereof for a particular purpose; Use of images and symbols is made for illustrative purposes only and does not constitute a recommendation or advice to take or refraining from any action; Use of brand logos does not necessarily imply a contractual relationship between us and the entities owning the logos, nor does it represent an endorsement of any such entity by Pay Set Limited, or vice versa; Market information is made available to you only as a service, and we do not endorse or approve it; Any reference to past performance, predicted returns, or likelihood performance scenarios may not reflect actual future performance and certainly do not guarantee future outcomes.

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