Research conducted by financial comparison site Money Expert has revealed the top five expenses consumers are cutting back on to pay for Christmas.
Dining out and takeaways take a hit as two-fifths of UK adults (40%) admit they’ll cut back on eating out.
Other spending cutbacks revealed in the survey include travelling, days out and experiences, and essential clothes and footwear. Entertainment subscriptions will also take a cut thanks to rising household costs.
The top five expenses consumers are cutting back on:
- Takeaways and eating out (40%)
- Travelling and holidays (17%)
- Days out and experiences (16%)
- Essential clothing and footwear (8%)
- Entertainment subscriptions (including Netflix, Spotify, Disney+, Sky TV) (8%)
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, it’s no surprise that disposable income and budgets for Christmas spending are likely to be impacted as a result.
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.
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.”
Money Expert’s tips for budgeting and spending over the festive period
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.
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.