Money Worries and Mental Health at Christmas

Christmas is a tough time for many people, and financial worries can stop you from enjoying the festivities. Find out about the effects that the festive period can have on your finances and your mental health, as well as ways you can combat the stress of the season.

Kristina Fox Last updated on 21 December 2021.
Money Worries and Mental Health at Christmas

Financial worries can affect our mental health at the best of times, but festive spending can have a particularly negative impact. The thought of how much Christmas might cost can feel overwhelming.

We consider how Christmas can have an impact on your finances and how this affects your mental health, as well as ways to ease the burden.

Mental health

Each year, one in four people in England will experience some sort of mental health problem. Mental health problems can be caused by many different things, including loneliness, past trauma and long periods of stress.

Christmas can put extra strain on our mental health, with almost a third (31%) of adults in the UK feeling ‘anxious or stressed’ in the run-up to the festive season, according to a 2020 survey commissioned by the Mental Health Foundation. This is in addition to a 2019 YouGov poll which found that 26% of respondents had felt depressed because of Christmas at some point in their life.

Money worries at Christmas

With presents and parties galore, the festive season can always affect our finances. The Bank of England has found that UK households spend over £700 more than usual in the month before Christmas.

This year’s festivities threaten to be costlier than before, with product prices suffering their fastest rise in 30 years according to the Confederation of British Industry (CBI).

What is more, recent research by Citizens Advice revealed that over a third of people (37%) are worried that they will not be able to pay their bills this winter, so the possibility of increased spending over Christmas threatens already squeezed budgets.

How can money affect our mental health at Christmas?

Money problems can cause guilt or anxiety. At Christmas, thinking about your finances can be stressful, especially if you have seen an increase in your spending but a decrease in your income this year.

As we continue dealing with Covid-19, there is pressure to make Christmas better than ever. However, trying to live up to such high expectations can pose a threat to both your finances and your mental health.

Research from the debt charity StepChange in 2019 found that nearly 70% of people felt unable to ‘comfortably’ afford Christmas – this was before the outbreak of the pandemic, and it seems that many of us are still worried in the lead-up to Christmas 2021. In a recent survey, MoneyHelper, the government-backed advice service, suggests that nearly a third of us are more worried about affording our Christmas plans in 2021 than in 2020.

The charity also suggests that over half (59%) of those who get into debt over Christmas do so as a result of the presents they buy for friends and family.

This festive financial strain can harm your mental health, potentially leaving you stressed or anxious about how to afford Christmas without overspending or getting into debt.

The season can hit those who already experience mental health issues even harder. Almost four in 10 people (39%) with existing mental health problems felt that their finances had a negative impact on their mental health, according to the independent charity Money and Mental Health Policy Institute.

This Christmas, things could be worse as households recover from the impact of the pandemic on their finances. According to the Financial Conduct Authority, almost a third (31%) of adults are seeing a drop in their income as a result of the pandemic.

5 ways to cope with money and mental health this Christmas

The financial and mental burden of Christmas is perhaps greater than ever this year, so looking after your mind and money is crucial. Ways to do this include cutting back on spending, setting a budget, and reaching out for support if you need it.

Feel comfortable saying no

Saying ‘yes’ to everything can put unnecessary strain on your finances during the festive season, as you stress about where the money for everything will come from.

Choosing to only buy presents for those closest to you or deciding to cut down on socialising could save you money and help with financial anxiety.

» MORE: How to save money this Christmas

Work out your budget

Creating a budget that sets out how much you want to spend at Christmas can help you keep in control of your finances and avoid Christmas spending turning into New Year debt. There are many free planners online that you can use to track your spending.

Be realistic about what you can afford

Retailers have made it easier than ever to buy expensive gifts throughout the festive season, with many now offering Buy Now, Pay Later (BNPL) options automatically at the checkout. BNPL can harm your credit score and you could face expensive fees/charges if you miss repayments. It may seem tempting to put off paying for presents, but you can end up spending more than you can afford this way.

Be realistic and make sure you can afford what you buy. Stick to the budget you have created; consider cutting back on some presents; and only buy items on credit if you know you will be able to afford the repayments.

Try buying secondhand

Another way to limit your spending is to think about how you can go secondhand this Christmas, saving you money as well as helping the planet.

Regifting – giving someone a previously unwanted present – can work too, but be careful not to give something back to the person who gave it to you!

Talk to someone

If things get too much over the festive season, it can be helpful to talk to someone about how you are feeling. This could be a friend or family member, or a charity which helps people cope with their financial or mental health troubles.

If you find yourself struggling with debt this Christmas and need support or advice, there are many debt charities which can help.

The Mental Health & Money Advice website contains articles about managing your money and caring for your mental health.

You can call Samaritans on 116 123. This free, 24/7 telephone service is available every day of the year, including Christmas Day.

Image source: Getty Images

About the author:

Kristina is a writer at NerdWallet. A recent graduate trading French for finance, she has experience creating content for student newspaper Cherwell and an edtech company. Read more

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