Christmas time is fast approaching and although it can be the most wonderful time of the year, it can also be a time of year that can put additional pressure and strain on our wellbeing. This can be caused by our finances being stretched through the cost of purchasing presents, food and celebrations.


One of the key considerations when it comes to navigating through the festive period is the use of a budget. Each individual has different spending capabilities so it is important to establish early on what your Christmas budget will be and then stick to it. Although sometimes this can be easier said than done, it could be useful to transfer your established budget into a different account, or set up a pot on your banking app. Remember to prioritise and ensure that regular bills and living expenses are all accounted for.

Overspending during the festive period is easy, so it is important to find a method that works for you and will allow you to establish and adhere to a feasible budget. It can be easy to consider credit cards and borrowing, but this should be avoided. The stress and cost of repayments/interest will outweigh the potential joy of the initial purchase. If you do have to borrow, ensure this is at 0% and that you have a plan to repay this debt. 

Shop around for deals

Once you have set your budget you could consider putting your funds into ‘pots’, so pot one for gifts and pot two for food, having the funds set out in this way and keeping it separate from your day to day spending can help ensure that you are not spending more than you plan to.

Another useful tip is to start early if possible; this can make the spending much more manageable and have a smaller impact on your day to day finances.

Usually the high street would be full of excited shoppers searching for a Christmas deal and enjoying a day out, but with Covid still being prevalent in society; many shoppers have turned their focus to online shopping. As with shopping on the high street “till-point” sales also exist online and it can be very easy to fill up your virtual basket with additional gifts before you pay, so again, ensure you maintain a budget and aim to stick to it. I would also suggest obtain gift receipts where possible to ensure items have the option of being returned if necessary. If you are planning to shop on the high street be sure to follow the latest Covid safety and travel advice to ensure you remain safe.

Tax-efficient gift

If you are unsure what to buy if might also be useful to consider tax-efficient gifting. Currently, each individual has an annual gift allowance of £3,000 and if this was unused in the previous tax year, it can be carried forward to make a total of £6,000. This can be given to one lucky person, or split between several. The gift is exempt from Inheritance Tax and immediately outside of your estate once the gift is made.

Money worries can have an impact on your mental health. If you can stick to the traditional financial principles of budgeting, spending what you can and not what you want, as well as looking for good value, this should lead to positive, mental health and a happier new year. 

The information given and opinions expressed are subject to change and should not be interpreted as investment advice. All data is sourced by IM Asset Management Limited unless otherwise stated. All financial and wealth management services are provided by IM Asset Management Limited which is regulated by the Financial Conduct Authority (FCA), FCA Firm Reference Number 402770.