Saving for Christmas

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Christmas shopping can be stressful if you aren’t fully prepared for how expensive it can get, especially if you don’t have a savings pot set aside. Saving for Christmas allows you to spread the cost throughout the year, which can lower the financial impact of Christmas shopping and help you avoid falling into debt. In this article, you’ll find out how to save for Christmas, when the best time to start saving is, and which types of Christmas saver accounts might be best for you.

Key takeaways
  • Budget: When saving for Christmas, it’s important to set a budget so you know exactly how much you’ll need to put aside each month to reach your goal

  • Be organised: Although it’s never too late to start saving for Christmas, the earlier you begin, the more interest you’re likely to earn

  • Christmas savings: It’s much safer (and more financially rewarding) to put your money into a competitive savings account rather than a potentially unregulated Christmas savings club

How do I save for Christmas?

If you want to save money for Christmas*, the first step is to set a budget. In the UK, we spend an average of £740** on gifts, decorations and food, which is 29% more than we spend in a typical month.

When planning your budget, consider how many gifts you’ll be purchasing, and allocate an amount for each. If it’s your turn to host Christmas celebrations, you may well also want to factor in food, drink and decorations.

Next, work out how much you can put away each month until Christmas. For example, if you start saving £150 each month from August, you could save £750 by December, which is over the average spend and might leave you with a little flexibility.

When considering how much you want to save each month, it’s best to be realistic and only commit to a manageable amount. Once you know you can manage your monthly bills and outgoings alongside your Christmas savings, you may even be able to save a little more.

Five tips for saving for Christmas

To increase your Christmas savings and boost the budget for your festive fun, our top tips for saving for Christmas include the following:

1. Eliminate unnecessary presents

While it would be wonderful to purchase gifts for everyone in your address book, this simply isn’t realistic, or affordable for the majority of people. You can make saving for Christmas easier by eliminating any unnecessary spending, or by agreeing a maximum spend limit with friends and family. Making a list of people you’re buying for and what you want to buy them will help you focus just on what you need to buy, and prevent the temptation of purchasing unnecessary gifts. This is especially important in the current climate, when the soaring cost of living is already putting considerable strain on household finances.

2. Consider purchasing online

There’s something festive about high-street shopping at Christmas, but a more cost-effective option might be to buy online, where prices are often cheaper than those found on the high street. (And ordering online also means no crowds, traffic jams, or car park charges.)

3. Book travel tickets in advance

It goes without saying that millions of people travel at Christmas time. Whether it’s for reuniting with far-flung family members or swapping fireside eggnogs for poolside cocktails, travel costs are often an integral part of the Christmas period. It’s almost essential to book tickets in advance to avoid peak costs. Airlines and rail operators often have early-bird offers, but you can sometimes get last-minute deals if you’ve left it a little late.

4. Sign up for email alerts from online stores

Signing up to retail newsletters can mean an influx of unwanted emails, but during the festive period, stores often reward customers with exclusive access to deals, as well as member-only sales and voucher codes.

5. Allocate a day for your Christmas shopping

One of the main reasons for overspending is last-minute panic. Consider setting a date aside (that’s earlier than Christmas Eve!) so you can take your time. This will help you keep track of your spending, and make better purchase decisions. It’s also a good idea to write a gift list so you avoid the temptation of buying unnecessary extras.

When should you start saving for Christmas?

It’s never too late (or too early) to start saving for Christmas, in fact, it’s always best to consider saving well ahead of time. The earlier you start saving for Christmas, the more interest you can earn on your savings. You can compare a range of high-interest savings accounts on the Raisin UK marketplace.

Christmas savings clubs - a word of caution

Christmas savings clubs are saving schemes you pay money into throughout the year in exchange for vouchers, toys or hampers in the run-up to Christmas. While this idea might sound appealing, these clubs should be treated with caution.

Firstly, Christmas savings clubs aren’t protected by the Financial Services Compensation Scheme (FSCS) in the same way that banks and building societies are. This means that if they go bust – as Farepak famously did in 2006 – you could lose all of the money you’ve saved.

Secondly, Christmas savings clubs tend to pay out in vouchers, which can limit the places you can spend your cash. Plus, if an individual retailer goes out of business, you won’t be able to use the voucher there. In fact, research by Which? found nearly one in 10 people had received a gift card for a shop which has gone into administration since the start of the pandemic. Although some companies will still accept gift cards if they’re taken over, they’re not obligated to do so.

Finally, it’s worth remembering that Christmas savings clubs don’t pay interest on your savings, unlike a regular savings account. For this reason, it’s usually a better idea to open a savings account that pays a competitive interest rate. You can still save throughout the year but you’ll have the added benefit of receiving interest in the form of cash, which you can then put towards your Christmas spending. What’s more, all savings accounts in the Raisin UK marketplace are covered by the FSCS (or equivalent scheme), meaning your deposit is protected.

How to find the best Christmas savings account for you

If you want to maximise your savings and enjoy a stress-free festive period, you might want to open a dedicated Christmas savings account. Saving into a notice account or fixed rate bond could help ease the burden of Christmas expenses and even give a little boost to your celebrations.

Notice accounts

A notice account is a great option if you want to save money for Christmas but might need to access your funds in the meantime. Notice accounts typically offer competitive variable interest rates, and allow you to withdraw your money by giving your savings account provider notice, usually up to 90 days, that you want to make a withdrawal.

Fixed rate bonds

Typically offering a competitive, fixed rate of interest, fixed rate bonds might be right for you if you have a lump sum of money that you can lock away for a set period. If you’re saving for Christmas, you might want to compare six month and one year fixed rate bonds.

If you don’t celebrate Christmas, you may still want to take advantage of the exclusive shopping deals the festive period usually provides. You could use the 25th December as a savings deadline, or splash out in the January sales with the money you’ve saved.

If you want to quickly and easily apply for savings accounts to help you save for Christmas, register for a Raisin UK Account and log in to apply today. Don’t forget that it’s free to open an account.

If you have any questions, our UK-based Customer Services Team will be happy to help.