Christmas 2023: People to spend less on festive season than Xmas 2022 but will still go into debt, surveys find

Families will spend almost £200 less on the festive season compared to last year as the cost of living crisis continues to bite, but people will still go into debt to pay for Christmas, two new national surveys have revealed.

One study, commissioned by Park Christmas Savings, also found that two thirds of Brits say Christmas is the most stressful time of the year, not the most wonderful. The poll of 2,000 employed UK adults, which was conducted in September 2023, revealed that 65% of people in the UK struggle with stress brought on by Christmas expectations, with finances the number one cause of tension. In addition, the study found that more than 7-in-10 Brits (71%) struggle to budget effectively for Christmas. 

This year, as a result of the ongoing cost of living crisis, families are set to spend £730 on all the various costs associated with Yuletide, on average – down on £900 in 2022. Almost a quarter (23%) are more worried about paying for Christmas 2023 compared to Christmas 2022, according to the research.

Psychologist and TV personality Emma Kenny said it’s common to experience festive stress. “It goes without saying that Christmas can be incredibly stressful for all. It’s important we muddle together and get through the stress to enjoy spending time with family and friends.

“Being financially prepared for Christmas is a sure-fire way to at least ease the tension around the festive period. Planning ahead and being as best organised as possible will give you a clearer head, meaning you can focus on the things that are most important to you.”

Almost a quarter of Brits will have to go into debt to fund their Christmas shopping this year as the cost of living bites, according to another survey. The cost of Christmas survey of over 2,000 people, carried out by personal insolvency provider Creditfix, found that 7.7% of people will be using their credit card to pay for this year’s festivities.

In addition, 15.3% will be using buy now pay later services, 2.4% will be using store cards and 4.8% will be using their overdraft. A fifth (20%) state that it will take them at least three months to pay off their debt this Christmas – with 4.4% even expecting to still be paying off this coming Christmas in December 2024.

Cautious shoppers also plan to spend less on gifts according to the research, with 17% cutting back on presents for pals, 14% spending less on their partner and 15% spending less on their parents and siblings. In addition, 9% will lower the cost of gifts for their cousins and grandparents.

Lowell’s UK CEO John Pears said that there can be a lot of pressure on people to spend more at Christmas time. He added that the one thing  that can make a huge difference is budgeting. He said: “It's really important that families take the time to understand their finances and budget properly. That way everyone can enjoy Christmas without worrying.

“During this period it is especially important to make sure people do not make their situations worse. For those in debt already it is so vital that people reach out to their creditors to let them know if they are struggling. Saying nothing can do the most damage.”

How to cut costs and spend smart this Christmas

Luke Eales, personal finance expert at Wealth, has offered straightforward advice for the practical steps everyone can take to ensure everyone can enjoy the festive season without putting themselves under financial strain. 

He said: “No one likes to be a Scrooge at Christmas, but being wise with your wallet doesn't mean skimping on festive cheer. It's about making smart choices that allow you to revel in the Christmas spirit while also respecting your financial boundaries. This year, perhaps more than ever, finding a balance is essential. Remember, the memories, laughter, and time spent with loved ones make Christmas truly special, not the price tags.”

Here are his four top tips for buying smarter, but also spending less:

Set yourself a budget

“One of the main things that people come a cropper with during Christmas is spending more than you realise. By looking at your initial outgoings and figuring out what you can spend without putting yourself in debt, you can easily weather the snowstorm of mounting Christmas expenses. 

When you set your budget, don’t just account for presents. Remember the trimmings, food and drink. Track your expenses, maybe with a festive spreadsheet . . . call it ‘Santa’s Ledger’ if you want to inject some festive spirit into something so inherently boring. 

Remember that Black Friday is coming soon, so you can get bang for your buck on discount items you’d already set aside money for.” Black Friday, which this year officially takes place on Friday 24 November, lasts for much longer than just the one day. Some early deals are live now, and more will continue to go live throughout the month, so there’s plenty of opportunity to bag yourself a bargain.

Stock your freezer ahead of time

“This one's for those who go into a frenzy trying to perfect the Christmas dinner. Rather than elbowing your way through December crowds, why not get a head start now? Items like turkeys, veggies, and other festive favourites can be purchased on sale and stored away for the big day.” 

Most foods will keep for at least three months in the freezer - with exceptions to milk, which lasts for one month, and cured meats, which last for two months, so you’ve got plenty of time to go discount shopping and freeze your bounty ready for the big day.

Pitch Secret Santa to a big group

“Secret Santa is a fantastic way to sprinkle some festive fun without draining your purse. If you've got a big group - whether it's family, friends, or colleagues at work - setting a budget and buying for just one person can make things more manageable and merry. The best part comes from the guessing game of who bought what.”

Consider DIY or secondhand gifts

"We’ve heard the saying, 'It's the thought that counts’. Getting crafty and making gifts adds a personal touch. Whether homemade cookies or a knitted scarf, DIY gifts scream effort and thoughtfulness. If you consider yourself someone who’s less than crafty, there’s hidden treasures to be found in charity shops. Not only are you likely to snag a unique secondhand gift, but you're also helping a good cause and getting more bang for your buck.”