Simple Christmas ‘spending plan’ to curb 2023 debt

Christmas is an expensive time of year for many households, with gifts, parties and other seasonal activities weighing heavily on the purse. Coupled with the current cost of living crisis and rising energy bills, many Britons are looking for ways to cut back this year.

Cortney is a financial planner who shared personal finance and budgeting tips on her TikTok page @moneywithcortney. She said: “If you haven’t created your holiday spending plan and you don’t want to enter 2023 stressed out and in debt because you overspent you need to do it immediately.”

According to Cortney, making a financial plan doesn’t have to be difficult, and the correct planning will ensure you don’t miss out on the things that are important to you.

By following five simple steps, Cortney explained how you can “enjoy the holiday season without having to be stressed about money.”

Step one: Choose a maximum budget

Before you embark on spending, the financial planner advises looking at how much money you really have to spend on gifts and outings without eating into the budget for other daily expenses.

“Decide on your maximum budget,” she said. “This is the maximum amount you’re going to spend on everything, not just gifts. You want to include all of your holiday expenses. So, if you are going to be buying any new holiday decor, holiday outfits, travel expenses, holiday activities, things like that.”

Make a list of all of the things which are likely to incur a spend and then you can move on to splitting up your budget efficiently to cover all bases.

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Step two: Separate your Christmas spending money from other expenses

Ofgem’s quarterly energy price cap is set to rise to an annual level of £4,279 in January 2023, with bill-payers protected under the government’s Energy Price Guarantee (EPG) at a rate of £2,500. This will be increased from April 2023 to a new level of £3000. As the winter weather continues, this is likely to mean more households will need to put extra money to one side for bills.

Therefore Cortney advises actively separating your seasonal spending from any other money which you may need early in the new year. “Separate the money that you’re going to be using to spend during the holidays from any other money that you have for bills, other expenses, other savings, all of that,” she said. “It could mean opening up separate savings, transferring what you already have over and then scheduling automatic transfers for anything additional that you want to save moving forward.”

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Step three: Make a Christmas present plan

While it can be easy to go into a shop or fill your basket online whenever something takes your fancy, it’s important to keep your budget in mind.

“Make a list of every person that you are going to be buying gifts for as well as everything else that you’re going to be spending money on and designate a specific amount to each one,” recommended the financial planner.

Step four: Price things out

In a similar vein, before making any purchases, you should think about what you want to buy and price out each item. Shopping around can help to save some money during this process.

“This step is really important in order to make your spending plan realistic,” explained Cortney. “Price things out in advance. Have an idea of what specific gifts you may want to buy the people on your list as well as get more specific about the other expenses.

“So, for a holiday dinner or where might you want to go to dinner, look that information up, that way you know how much it may cost you.”

Step five: Track your expenses are you go

Even once you have made your plan, it’s important to keep checking in with each step. Cortney explained: “It allows you to be aware and gives you the flexibility to make adjustments along the line so you can still stick to your maximum budget.”

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