Christmas is hurtling towards us, but with the cost of living crisis continuing to grip the nation, this festive season may be a difficult one.
Costs are rising everywhere we look, from chocolate (which is 18.4% more expensive than last year) to rent, which increased by 5.5% to £1,354.
And with Santa coming down the chimney in the not-so-distant future, the spending is only ramping up.
But how much does the average family spend at Christmas, and where does that money go?
How much does the average family spend at Christmas?
It should come as no surprise that December is an expensive month for families.
The average household spends £2,500 monthly, with that total rising more than £700 in December according to the Bank of England (BoE).
The BoE says the average family spends an extra £740 in the run-up to Christmas, taking us to £3,240 – which works out at 29% extra.
In 2025, Money SuperMarket estimates Brits will spend an eye-wateringaverage of £1,626 per person. Gifts are obviously a big portion of this expenditure, with presents for family, friends, and ourselves (plus wrapping paper) amounting to £291.16.
If you want to send Christmas cards, that’ll set you back another £46.30, including postage.
Food is another big expense, with festive drinks, groceries, turkey and meals out totalling an even bigger £352.77.
But just because we’re stretched thin doesn’t mean we don’t have it in us to be generous, as the average household gives £52.47 in charitable donations and £50.41 in gifts and tips for service workers.
Accommodation and travel expenses, insurance, Christmas decorations and outfits, as well as work parties and festive activities, account for the rest of the total.
What do families spend the most money on?
Data from the BoE found that things which only make up a small portion of our spending for 11 months of the year suddenly increase in December.
Spending on video and music equipment and books grows the most, skyrocketing from the average typical spend of 0.23% to 95%.
Book sales also double in December, while sales for computers and phones rise from 1.1% to 61%.
What we spend on tasty treats also increases as families stock up on mulled wine and mince pies for their festivities; in fact, spending on food and alcohol goes up by an average of 20% and 38% respectively according to the data.
However, the run-up to Christmas does see families curb other outlays.
Spending on goods such as paints and hardware goes down by 21%, as we delay these jobs until after the festive period.
Christmas money-saving tips
If you’re worried about your bank balance depleting, the following cash-saving tips can help you cut the cost of Christmas and start January in a great financial position.
Sign up for a cashback card
This is a credit card that will give you points or cash on all spending. American Express usually has the best cashback deals, and many of its cards are fee-free in the first year with an introductory bonus.
Currently, the free Amex Cashback Everyday card offers 5% cashback on all purchases for the first five months, up to a maximum of £125. Non-Amex options include the new Lloyds Ultra card, which is also free and offers one per cent cashback on spending.
Just ensure you pay it off each month, otherwise the cashback you’re receiving will be dwarfed by the amount of interest you pay.
Declutter to make a present-buying pot
Putting unwanted items on Vinted or eBay now could help you to build up a good pot of money before December.
Instead of leaving the money in your Vinted balance to spend on gifts, however, opening a savings account to deposit the money you’ve made will help to ensure it is kept safely until you need it and earns you some interest at the same time.
Easy access savings accounts with the Post Office, Tesco and United Trust all offer rates at over 4%.
Switch bank accounts for extra cash
Switching your bank current account to a new provider which offers a cash reward for the swap can be an easy way to make some extra money.
At present, the top offers include £200 for switching to either Lloyds or Barclays and £180 when you switch to TSB. You can’t usually get these bonuses if you’ve received similar cash incentives from the banks before though.
Have a chat about gifting
One of the best ways to save money this Christmas is to agree not to spend too much of it on each other.
Only buying presents for the children in a family can cut the Christmas spending significantly. But if this seems to be going too far, consider setting a limit to the cost of each gift, setting up a Secret Santa so that everyone only buys and receives one present, or agreeing to buy gifts exclusively second-hand or from charity shops.
This article was first published on November 27, 2022.
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