Buying gifts for our loved ones and getting the house ready for Christmas is part of the festive holiday cheer. And yet, millions of UK households experience holiday shopping as a source of stress rather than enjoyment. For them, the Christmas spirit is more about pressure and anxiety instead of calm and peace of mind.
This year, financial pressures can be harder to manage than usual. Because the COVID-19 crisis has triggered a rise in unemployment levels, national income fell by 20%, and the median after-tax household income dropped by 9%. According to a study conducted on UK adults aged 34 and under, 43% of people are worried about spending more than they can afford, and 20% about spending more than they need.
For most of us, the COVID-19 crisis led to new purchasing habits, and perhaps more frugality. When the nation’s economy is so uncertain, we tend to scrutinise every purchase and only spend money on the things we really need. This change in behaviour contradicts the consumerist nature of Christmas, and this time of year you might be faced with a financial dilemma: should you splurge on Christmas gifts, or should you be more cautious?
Research from the National Debt Line shows that 6% of UK adults (that accounts for around three million people!) feel that financial pressures make Christmas less enjoyable, and 2% even lose sleep in the run up to Christmas because of this.
Although money doesn’t bring happiness, there is a connection between financial distress and poor mental health. Constantly worrying about money and struggling to manage finances can affect your mood, causing anxiety, stress, and depression. Combined with the existing risk of Seasonal Affective Disorder (SAD), financial pressures can make you feel low, depressed, and hopeless about the future. They can also become a source of family disputes and create tensions as to which member contributes the most.
Even in these challenging times, Christmas shopping shouldn’t come at the cost of mental health or financial security. If you feel overwhelmed, these strategies can help you stay more organised and balance practicality with pleasure.
Budgeting is important all year round, but around Christmas, it can really make a difference. Having a budget for each family member and household expense (i.e., decorations, food, etc.), will give you a clear overview of your financial possibilities and put you in control. This way, it will be easier to avoid overspending and scrambling for cash at the last minute. For more peace of mind, set money aside for essential expenses first: rent, bills, groceries, gas, health expenses, and insurance. When creating a holiday budget, communicating with the rest of the family is key. Be transparent, and so that everyone is on the same page when it comes to what you can realistically buy – yes, even children.
People want the holidays to feel special and to do that, they often feel pressured to spend more than they need. One study found that 60% of UK households overspend on presents, and 64% on food and this year the number of people who take up loans to make it through Christmas will double than in 2019. But even though this Christmas you won’t be able to see your extended family in person, that doesn’t mean you should overcompensate by getting them the most expensive gift. Memorable Christmas celebrations are about inner peace and beautiful experiences, not material possessions. So, before you consider applying for a loan to buy the latest iPhone and the most luxurious Christmas decorations, ask yourself these things really mean something to you, or it’s just social pressure. Borrow money if it’s absolutely necessary, but refrain yourself from getting in more debt than you have to.
Holiday discounts can be quite overwhelming, but if you have a list of items you need to buy, checking seasonal offers can help you save big. We recommend starting Christmas shopping about a month before Christmas and not waiting until the last minute. This way, you’ll have more time to browse offers and compare prices, and you won’t feel physically and emotionally drained by the shopping frenzy. This year, the Government has banned holiday travel and family reunions, so if you’ll be seeing your loved ones after Christmas, you can wait for Boxing Day to get them presents. Prices drop considerably after the holidays, and you can save even more.
Gifts come in all shapes and sizes. A great gift can be an expensive watch, but it can also be a small, yet thoughtful object in which you put a lot of effort. Although there’s major pressure to spend a lot of money on fancy store-bought gifts, that doesn’t mean you can’t make your loved one’s day better by getting them a smaller, more creative gift. In fact, these gifts are usually better received because they show how well you know the person and won’t end up forgotten in a drawer somewhere. Something like a personalised art print, a photo album, or a handmade decoration is also a unique way of celebrating your relationship and staying emotionally connected. If you have a large family and it’s financially impossible to get everyone the beautiful gifts they deserve, you could suggest doing Secret Santa. This way, everyone gets what they want, and you don’t have to spend more than you can afford.
This time of year, managing family finances can be tough. If your household has been affected by budget cuts or unemployment and you don’t know how to manage the financial pressures of Christmas without getting into debt, it’s OK to ask for expert help. There are many ways to get free financial advice and debt consultation: NGOs, commercial organisations, and Government-backed services. Statistics show that eight in ten people feel more in control of their finances after getting professional financial advice, so that could help you enter 2021 with more confidence.