Research conducted by financial comparison site Money Expert has revealed that 6 in 10 UK adults (60%) will be cutting back on their spending over the Christmas period in 2023, compared to previous years.

Christmas is one of the busiest and most important times of the year for retailers, attracting shoppers with the latest products, tempting sales and gift ideas for their loved ones.

However, with the cost of living crisis continuing to affect millions of households across the UK, alongside high inflation and interest rates, disposable income and budgets for Christmas spending are likely to be impacted as a result.

Their recent survey asked 1000 UK residents about their upcoming plans for spending money in the run up to Christmas in 2023.

When asked what was often the biggest expense within their Christmas budget, over two thirds (67%) of respondents told Money Expert that gifts for friends and family was what they spend the most money on.

Prior to 2023, over a quarter (28%) said that they would spend between £100 and £300 on gifts in total. 28% also said that they would spend between £300 and £500 on gifts for family and friends.

59% stated that gift purchases will be their biggest expense within their budget this year. This is an 8% drop from last year, suggesting that UK adults will be prioritising their spending elsewhere or cutting costs where possible.

The survey also revealed that women are most likely to reduce their gift spending in 2023. With just under a third (64%) stating they would cut back, compared to over half of men (54%) who will be spending less on gifts for friends and family. The survey further outlined that 45% of men aged between 18 and 34 would most likely cut back their spending on festive food and drink in 2023 compared to previous years.

43% of men and women stated they would be looking to save at least £100 on the amount they spend on gifts overall, with 36% saying they wanted to save between £100 and £300. The survey found that it was millennials who are keen to save more, with 36% of men aged between 25 and 34 and 45% of women aged 35 to 44 looking to save between £100 and £300.

Energy bills have been a particularly heavy burden on millions of households over the past year, and the data suggests it’s still a major concern for many across the country. Over a quarter (27%) said that the increase in energy bills over the winter months has made them consider cutting their Christmas spending. Rising costs in food and drink was also a concern for 22% of households, while 18% stated they just wanted to cut costs where they could. One in 10 UK adults mentioned that the rising cost of mortgage repayments was the catalyst to cut spending over Christmas.

The survey also found that Christmas, during a cost of living crisis, has had an impact on consumers’ mood, emotions or wellbeing. As 12% of adults feel stressed and anxious worrying about when they can afford any Christmas spending this year.
One fifth (20%) admitted they feel guilty about having to cut back on spending this Christmas, while 17% worry that it will be a disappointment due to the cost of living crisis.

The thought of having to reduce spending and struggling to afford Christmas also makes 16% of respondents feel embarrassed.

Commenting on the results, Liz Hunter, Commercial Director at Money Expert said, “The festive period attracts high levels of spending with Brits who want to provide the best Christmas experience they can for their family and friends. What we have seen over the last 12 months is a perfect storm of high interest rates, rises in rent and mortgage repayments alongside the ongoing cost of living crisis, which has naturally had an impact on household disposable income. The survey outlined that many households will look to cut back on costs for Christmas gifts by at least £100 in 2023, as monthly bills and other expenses continue to impact their finances. This suggests that households are looking to save money where possible, but still want to provide a fantastic Christmas for their loved ones.”

‘“There are a number of ways households can take control of their finances, budgets and spending and still provide the best Christmas experience possible.”

Liz Hunter’s tips for budgeting and spending over the festive period and how to avoid overspending with BNPL:

Plan ahead and set a budget – Before you start anything, decide how much money you can realistically afford to spend on Christmas and create a budget accordingly. Consider all of your Christmas expenses, including gifts, food, drinks, travel, decorations, and entertainment. Once you have a budget, stick to it as best you can. It can be helpful to track your spending, such as setting up a spreadsheet or using a spending pot that many banks now provide their customers with to make sure you’re not going over your budget.

Using credit cards and Buy Now Pay Later services – Using cash or a debit card is always the best way to pay for Christmas without getting into unnecessary debt, however if you need to look at other ways of covering expenses, a 0% credit card or Buy Now Pay Later service can be a viable option. However, ensure you only spend what you can afford to repay and only use BNPL if you’re certain you’ll be able to meet the payment deadline.

Shop around and compare prices – It’s worth creating a list of everyone you need to buy a gift for and set an amount you’d like to spend on them. When it’s time to tackle the Christmas shopping, don’t just settle for the first gift you see, take your time and shop around by comparing prices to make sure you’re getting the best deal. Consider buying gifts online too, as there are often better deals available than in stores.

Shop early – The earlier you start shopping, the more time you have to find the best deals and avoid the last-minute rush. If you’re buying gifts online, be sure to factor in shipping time when you’re deciding when to buy them – some retailers have cut off dates before Christmas so be sure to get your orders in to avoid disappointment. You may also be able to cut back on delivery costs by shopping ahead of time and therefore taking advantage of free delivery, rather than having to pay for express shipping.

Take advantage of sales – Black Friday and Cyber Monday are good opportunities for shoppers to bag some great deals, particularly on technology and clothing. Some retailers continue their sales right through to Christmas so there’s a chance to find some great last minute deals and save money.

Sometimes ‘buy now pay later’ schemes can be handy for those who want to make large purchases but can’t afford it outright, particularly at Christmas time when we may already be struggling to cover essentials.

Can you afford it? – Before you make any purchases, ask yourself whether you can actually afford future repayments. Think ahead and if you can’t commit to the payment schedule, it may not be worth purchasing. This will prevent you being caught out if you find that you can’t afford the repayment once the deadline date arrives, or you miss other important payments elsewhere as a result of paying off your BNPL payment.

Stay on top of your purchases – It’s important to make note of your purchases and track what you’re spending using BNPL. Try and stick to one provider if you can, as this will make it much easier to keep tabs on your purchases and payment dates, rather than juggling multiple payments through different apps.

Say yes to payment alerts – Set up payment reminders or notifications to ensure you don’t miss any payment deadlines when using a BNPL service. All BNPL providers have notifications that alert you when a payment is due through their apps and you can also set up notifications to come through via email and text. It’s worth ensuring these alerts are properly set up so you never miss a payment deadline in the future.

Take advantage of longer payment options – Some providers such as Klarna give customers the option to pay over a number of months, interest free. If you’re purchasing an expensive item and splitting the costs over three months will relieve the burden on your monthly outgoings, it’s a great option to consider and will prevent any late fees from incurring or debt racking up, as long as you pay the monthly repayments on time.