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Christmas can be a wonderful time but this year more than ever, making a realistic plan, setting good financial boundaries and being kind to yourself has never been more important. In this article, I share five steps to avoid that Christmas hangover so many of us face in January whilst still having a Christmas you’ll love.

1. Decide on the kind of Christmas you want and can afford

Before you unpack the Christmas decorations and invite your entire extended family over, you first need to decide on the kind of Christmas you’re going for. This will be entirely personal but questions to ask yourself: just how important is Christmas to you, and those closest to you? Considering the rising costs of everything, what is a reasonable amount to spend this year? Is it lower than last year, and if so, what might you have to cut back on? Is this one of the only times you can see certain family, friends and loved ones? Or is it a day you participate in for the sake of tradition and you actually wouldn’t mind considering an alternative option?

2. Set financial boundaries and be open and honest about them

Christmas can be a really special time but it can also be a time of high pressure and expectation. Communication and honesty is key! Once you’ve decided on the kind of Christmas you’re going for - it’s your job to communicate that.

If you’re having a big family Christmas, speak to the adults in your family to gauge how everyone is feeling about budgets and be honest about how much you are able and willing to spend this holiday season. If you’re hosting, don’t be afraid to ask for help either. It’s so much better to have a slightly uncomfortable conversation about money and expectations for Christmas with family than it is to put yourself in a tricky financial place by the New Year. With the rising cost of living and uncertainty about the future, you’ll probably find that people are more receptive than you may expect to the suggestion of a more low-key Christmas.

3. Make a budget and plan your Christmas shopping accordingly

Once you’ve decided on roughly how much you can afford, you can start to make a list of your expenses. There are usually three categories: Gifts, Food & Drink and Other (this includes things like events, decorations etc.). In each category you’ll need to list all of the things to buy (if you’re hosting, don’t forget to delegate - it shouldn’t all be on you!). In the gift list, make a list of the people you want to get a gift for, and then categorise them in terms of importance. Next to each person, assign a budget and next to your food and other expenses, assign a cost estimate. Make sure that the total Christmas budget is 5-10% less than the figure you started with at the beginning (it’s good to build in a bit of a buffer).

Next, work out how long you have to save and how much you can save per month. Do you already have money set aside, or will you need to be thrifty and start saving now?

4. Leverage technology to save more and spend less

The key to avoiding that January financial hangover is to start saving early. Create a designated savings account or pot for Christmas and automate your savings. Set up a standing order via online banking so that your Christmas money will be moved from your current account Link opens in a new window to your designated savings account Link opens in a new window without you having to remember.

Some banks like Virgin Money have app features Link opens in a new window to help you save and stick to a budget, such as saving pots and the ability to tag and track transactions - it’s a great way to save and budget without thinking!

When it comes to shopping, there are loads of sites you can use whilst doing your Christmas shopping that will ensure you get the best deal when buying gifts.

Idealo Link opens in a new window lets you enter the product you want to buy, and it will show you how the price has changed over time, and where it is being sold for the cheapest price.

Camelcamelcamel Link opens in a new window shows you how the price of a product has changed over time on the Amazon site when you enter the Amazon URL.

Following product price trends can help you work out if now is the best time to buy, or if you would be better off waiting a few weeks! Google Shopping can also help find you the cheapest price of an item, and covers many retailers such as Amazon, John Lewis, Tesco, and Currys PC World.

5. Don’t be afraid to give differently

An easy and fun way to cut down on spending on gifts is to do Secret Santa. There are websites that can help assist in the organisation of this. Elfster Link opens in a new window is a great free site. You can sign up and enter details such as maximum budget and the date you'll exchange presents. You can even set up wish lists so that people know what to buy for you, and vice versa. The site then randomly selects who is buying who a gift, and individually emails everyone their selection.

If you’ve got kids or just need some inspiration you could try to be more intentional with your gift giving. One way of doing this is with the four-gift rule where you give something they want, something they need, something to wear and something to read.

Another option is to go in with other people to buy a gift. Is there a specific item that someone wants more than receiving multiple small gifts? This is always a great option.

Set up a Christmas challenge, maybe with a small prize incentive. For example, who can buy the best secondhand gift for under a certain amount of money.

Don’t underestimate the joy of going homemade! Is there a certain craft that you are especially good at? If so, that’s a great way to keep costs down whilst still giving a personal present that shows that you care.

Hosting Christmas this year? Instead of single handedly providing food and drink, suggest to your guests that you do a “potluck”- a dinner where every attendee brings a dish. This simplifies meal planning and spreads the cost between all participants.

Activities are invaluable!

The lead up to Christmas is the best bit in my opinion, and there are plenty of free or very cheap activities that you can do. This is also a great option if you have kids in the family. Here are a few ideas of Christmas activities for your inspiration:

1. Track Santa’s journey online! Log in to Link opens in a new window and you can follow Santa’s progress as he makes deliveries around the world on Christmas Eve.

2. Make your own Christmas decorations, Christmas cards, and wrapping paper. Have a craft day with the kids making cards and cutting snowflake shapes out of paper. You can also make stamps out of potatoes. Cut Christmas shapes into the side of a potato and dip it into nontoxic paint. Add these to cards or to brown packing paper to make personalised homemade wrapping paper!

3. Go on a long wintry walk, and see the Christmas lights. Top it off with a mug of hot chocolate to get you into the festive spirit.

4. Decorate the tree and pop on some Christmas carols.

If you’re worried about giving your kids a good Christmas on a budget, remember that activities are really what children remember, not what toys they get every year. You can arrange other fun activities for them to do on Christmas day so that the day isn’t centered around opening and playing with presents.

So there you have it, five steps to avoid that Christmas hangover so many of us face in January whilst still having a Christmas you’ll love. I hope you’ve found this helpful.

For more financial inspiration, follow Go Fund Yourself Link opens in a new window on Instagram.

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