Revealed: the true cost of Christmas

Research shows most of us haven’t a clue how much we’ll spend this season. Here’s how to wrestle back control

We collectively spend just under £446,000 every minute of every day on presents alone in December (AFP)

Happy Christmas.

The bid to part us from our cash has just ramped up another notch. And it’s working.

This month we will collectively spend just under £446,000 every minute of every day on presents alone. Not the new string of fairy lights or the weird food we wouldn’t touch at any other time of year or even the must-have Christmas pyjamas. Just the presents.

To put that into some sort of context, the Americans part with $2,372,227 or roughly £1,857,000 every minute this month. Even taking into account the population difference, they’re still the biggest average spenders.

At the other end of the scale, Luxembourg has a more low-key approach to Christmas consumerism, parting with only €3,200 or £2,860, according to an analysis of figures from Ing by (rather oddly) business card provider Ecard Shack.

It works out at only two thirds of the UK average personal spend.

How much?!

So far so mildly interesting.

But ask an individual how much they have or will spend on Christmas this year and most won’t be able to tell you.

It’s one of the reasons the “average” Christmas spend figures that appear all over the media at this time of year vary dramatically.

But one experiment this week revealed we can’t even remember how much we’ve spent as we leave the physical or online store. Barely two minutes after making the payment, only 16 per cent of shoppers knew exactly how much they had just parted with.

Another 32 per cent had “no idea” and around half had a ballpark figure in mind – which was usually about 10 per cent wrong according to a survey by Ocean Finance.

The study also found that those who paid with cash had the clearest idea of their spending, followed by chip and pin payments. Mobile or contactless payments had the worst successful recall rate.

Hey, big spender

So who are all these frivolous spenders? Inevitably, the biggest spenders are families with kids. Various polls show families with children under the age of 18 will spend anything from £1,000 to more than £2,700 in total at Christmas, with gifts making up the vast majority of the spend. Those without dependent children spend less than half that amount.

Women top the spending for presents, food and drink whereas men will part with more cash on going out and “little extras”.

“From the first Christmas advert, to the last-minute junk email, you’ll be under pressure to spend a fortune this Christmas, so it’s no wonder that most of us end up blowing the budget,” says Sarah Coles, personal finance analyst for Hargreaves Lansdown.

“We might start well by carefully planning what we’re going to spend but by the time we’ve made it through the festive hype and the ‘irresistible bargains’, 57 per cent of us will go overboard – racking up an average overspend of £152.70.

“It’s one of the reasons why so many people end up falling back on credit to fund at least part of Christmas – with one in four people putting at least some of their festive spending on plastic, and one in 14 dipping into an expensive overdraft.”

In fact, 10 per cent of UK households will put the entire cost of Christmas on a credit card, says GoCompare.

“But while it’s easy to spend too much at Christmas, there’s really no need to start yet another year with a debt hangover,” adds Coles.

“There are some steps you can take right now to keep your Christmas spending plans on track.”

Seven ways to avoid festive overspending

1 Use a budget

Half of us start well by drawing up a budget – splitting the sum they can afford between the expenses. This is the best way to keep costs under control.

Throughout the “shopping season” you’ll be tempted to overspend – there’s a whole industry devoted it. Before you do, force yourself to leave at least 24 hours before making a purchase, to be sure this is something you really need. If you decide to go ahead, work out where you’re going to squeeze the extra cash from in your budget before you buy.

2 Ditch the extras

Some things we do because they are traditions, but they’re expensive and nobody really values them. Do you really need festive liqueurs or fancy crackers? Don’t just assume everyone else wants to stick with old traditions, ask them.

3 Resist the urge to upshift

Sales of premium ranges soar at Christmas, as we treat ourselves to posh ham and top-of-the-range cheese. There’s no reason why you can’t eat the same things you enjoy all year round, but if you’re determined to treat yourself, it’s worth trying the cheaper premium ranges of the budget supermarkets.

4 Slash your gift list

If you’re struggling to stretch your budget, cut the number of presents you buy. Talk to groups of friends or family and agree not to buy for one another this year. You can just buy for the children, or run a secret Santa, so you buy for one person in each group.

5 Buy second hand

Younger children aren’t going to care whether it comes in the original packaging, so you can pick up second-hand toys for a fraction of the price. Adults, meanwhile, may well love a vintage gift. Even hard-to-please teenagers may agree to technology that’s a year old if it means they get their favourite brand.

6 Use technology

Before you buy anything, go online to see if another retailer has a better deal, or there’s a discount voucher you can add to the mix. If you have time, leave the item in the digital shopping bag for a couple of days, and the retailer may send you a special offer.

If you are planning to buy from Amazon, look the item up on CamelCamelCamel, which tracks prices of Amazon items and will show you whether you’re getting a good deal. You can also sign up for alerts when the price drops.

7 Stretch Christmas

If all else fails, agree to see groups of people in the New Year. Then you can buy their presents in the January sales or consider a cheeky re-gift or two.

Source: Hargreaves Lansdown