Spending on Christmas Presents to Dip by Only 5% in 2020, Study Finds

In this article, our NerdWallet research examines how much consumers plan to spend on Christmas presents in 2020, how they’re paying for them, and how spending compares to 2019 – alongside practical ways to save on Christmas presents and how to say when you can’t afford to buy presents.

Rachel Lacey Last updated on 21 January 2021.
Spending on Christmas Presents to Dip by Only 5% in 2020, Study Finds

Despite many households facing financial struggles up and down the UK, British families are refusing to let coronavirus spoil Christmas any more than necessary, with many planning to spend virtually the same on Christmas presents as they did last year.

According to research conducted by NerdWallet with 2,000 UK adults, the average adult in the UK plans to spend £285 on presents this Christmas – just £14 less than 2019.

Women will splash out the most – £296, compared to men who plan to spend only £272. Women are tightening their belts more, however, expecting to spend £20 less than last year, while men are reducing their budgets by only £6.

Women may be tightening more because women’s jobs have been more at risk from the economic challenges caused by the pandemic. This is supported by research from management consulting firm McKinsey & Company, which estimated in July that women were losing their jobs because of COVID-19 at a rate 1.8 times higher than men.

Big spenders

Older adults are planning to spend the most. The biggest spenders – at an average of £312 – are in the 35-54 age group, followed by the over-55s, who are shelling out £305.

John Ellmore, operations director at NerdWallet UK said: “Although lots of families will be feeling the pinch this Christmas, many will be saving money by not going out over the festive period and won’t want to add to the COVID misery by cutting back on gifts.”

Adults in London and the South East – perhaps surprisingly – are spending the least, £267 and £247 respectively. The most generous gift givers are in Wales, where the average spend is expected to be £328, closely followed by Northern Ireland at £327.

In England the biggest spenders are to be found in the North West and Yorkshire, which both have an average gift budget of £303.

The gift of giving

Three-quarters of people (75%) described giving gifts as one of their favourite things about Christmas, compared to 45% who said they loved to receive gifts. Six in 10 (62%) will still be buying for friends and family they won’t be able to see in person over the festive season.

Close to half (44%) said they would also spend more money – and time – buying ‘special gifts’ for loved ones, in an attempt to make up for a difficult year. Younger adults (18-34) were the most likely to want to compensate for a lousy 2020, with 61% planning to make an extra effort.

A third of people (32%) said they will spend more on gifts because they won’t be spending so much on travel and socialising this year. Again, younger adults are most likely to splurge, with 48% of those 18-34 planning on it.

Ellmore said it’s important, however, not to get carried away, particularly if you are already feeling the pinch. “While families may be even more eager to put a smile on their loved ones’ faces, perhaps because they haven’t seen each other all year or because so many other Christmas activities have been cancelled, our research suggests they may still be paying for it in the New Year.”

Christmas on credit


of people have a clear budget in place of how much they will spend on Christmas presents this year

Ellmore says: “Without a proper budget, where you set a maximum spending limit for each person you are buying for, it’s all too easy for your spending to spiral out of control. You are more likely to use your overdraft or put purchases on your credit card and if you’re not careful you could end up with an almighty financial hangover come January.”

A third of adults (32%) plan to use credit cards. Over one in 10 (12%) think they will need to take out a loan.

It’s no surprise that 18-34 year olds are more inclined to put Christmas on credit. Younger adults have been amongst the worst hit by the pandemic, with research from HMRC finding that those younger than 25 the most likely to have been placed on furlough. The under 25s are more likely to be out of work too, with the Office for National Statistics (ONS) finding unemployment rates at 13.6% in the 18-24 category, more than twice the national average of 4.8%.


of millennials will rely on a credit card and 26% a loan

More than a third (37%) of this age group also said that they were stressed about the cost of Christmas, well above the average rate of 22%, with close to half (47%) saying that they would need to spend less on themselves to foot the bill.

1 in 5

adults are stressed about how they will afford Christmas this year

10 top tips to cut the cost of Christmas gifting

There are plenty of ways to cut the cost of gifts without diminishing the Christmas cheer.

  • Be budget conscious: Write a list of everyone you need to buy gifts for, from obvious family members to the kids’ teachers at school. Set a maximum limit for each and only increase the amount you spend on one gift if you’ve made cost savings on another.
  • Cap your wrapping: Wrapping paper, gift tags and bows can make a serious dent in your gift buying budget. Cheap brown paper may not sound very festive but it can look great if you decorate it with festive stamps or brightly coloured ribbons, bows or Christmas twine.
  • Price shop: If you have a specific gift in mind, compare online, or on the high street, to make sure you don’t pay more than you need.
  • Look for discounts: Black Friday and Cyber Monday may have been and gone, but there may still be bargains to be had. Watch for early sales, and if you’re shopping online, always do an internet search for voucher codes before you buy.
  • Get cashback where you can: If you are shopping online, always see if you can make your purchase through a cashback site to earn a percentage of your spend back.
  • Get in the kitchen: With everything from pantos to parties cancelled we will all have more time on our hands this December, so why not put it to good use by making some gifts? You don’t need to be a creative type. Homemade Irish cream is easy to make, as is mulling syrup to mix with wine, cider or apple juice. Just invest in some kilner bottles, labels and twine and they will look something you picked up at a Christmas market. Alternatively set the kids to work making festive fudge, chocolate truffles or iced gingerbread biscuits. They’ll be cheaper than anything you could buy in the supermarket and will often be more gratefully received.
  • Give the gift of time: If money is tight, why not share your time or experience with family and friends? Young parents will be hugely grateful for a promise to babysit once life returns to normal, while busy new homeowners might appreciate the offer of a day’s work in the garden or some help painting and decorating.
  • Team up: Lots of parents will want to buy gifts for teachers, teaching assistants, team coaches and other club leaders. Rather than spending £10 on each gift, why not club together with other parents and pay £5 towards a collective present? A £50 voucher for a shop they like will often be better received than numerous boxes of chocolates or bottles of wine. With Whatsapp and a PayPal Money Pool it’s less hassle than you would think to organise.
  • Buy family gifts: Rather than buying something for every member of a family, why not consider one gift everyone can enjoy? A family friendly board game is often a great choice, as are cinema tickets or a day out at a tourist attraction.
  • Secret Santa: Whether for family or a group of friends or colleagues, Secret Santa is a great way of reducing the number of presents you buy. Just make sure every name goes in the hat and that everyone agrees with the budget. It might also be helpful to clarify whether you’re buying ‘jokey’ or thoughtful gifts.

Difficult conversations

While savvy shoppers can do much to cut the cost of Christmas gifts, if you are struggling with money this year, the easiest way to trim your bill is to simply buy fewer presents or make more drastic cuts to your budget.

This may feel like a bold step, but it’s often not as big a deal as you imagine. The key is to talk to friends and family about it.

Ellmore said: “You might offend or cause embarrassment if you just strike people off your list – especially if you are still on theirs – but if you talk things through first, you may well find they agree and are relieved to save some money themselves too.”

The NerdWallet research found that 48% of people have already agreed with family or friends to either reduce the amount of money they spend on presents or cut the number of presents they buy. Cash-strapped younger adults were most likely to raise the issue, with as many as 58% of 18-34 year olds having already spoken to loved ones.


are worried family and friends will overstretch themselves to buy Christmas presents

Ellmore adds: “Many families will share lists over Christmas, or you may ask loved ones what they would like. However, you really should let them know if their suggestion is out of your budget. Or you could suggest teaming up with another family member to buy it. In many cases they won’t realise how tight your finances are and few will want their gift requests to plunge you into financial hot water.”

Understand the cost of borrowing

According to the NerdWallet research, nearly one in five (19%) will take on more debt than usual this Christmas.

In an ideal world we would all have enough money on hand to pay for the festivities. But sometimes borrowing is unavoidable and if you do it wisely it needn’t be expensive.

Overdrafts could be a convenient, short-term option. However, high interest charges mean they can be expensive if you aren’t able to repay the money quickly.

Credit cards are designed for shorter term borrowing and can work out the cheapest way to borrow if you find a credit card that charges 0% on purchases for a fixed period of time. If you don’t have one, or can’t arrange one in time, you can use an existing credit card to do your Christmas shopping and then transfer the balance before the monthly payment is due, onto a 0% balance transfer card. Just be aware you may have to pay a fee to do this.

With either type of card, however, it’s important that you make monthly repayments and clear your balance before the end of the 0% period, otherwise you will start paying interest.

Such cards can be a good way to spread the cost of big expenses – like Christmas – but they are usually only available to borrowers with a good credit history.

Get help if you need it

If the cost of Christmas has made you realise how much you are struggling with money or that your borrowing and debt is getting out of control, it is important to get help.

Ellmore says: “Take advantage of the Christmas break to try and take control of the situation. Talk to family and friends about your difficulties and see if you can write a budget that ensures bills are met and debts repaid. Often a forensic analysis of your spending highlights obvious areas where you can make serious savings.

“Switching energy suppliers and cancelling unnecessary subscriptions can boost your finances but if that still isn’t enough it’s worth getting some professional advice about your options.”

Free and impartial advice is available from debt charities including Citizens Advice, National Debtline and Step Change.

Plan ahead for Christmas 2021

Christmas is often a financial squeeze and leads to dread over the January credit card bill. However, if you start thinking about Christmas 2021 now, you may be able to ease the strain next year.

With our research finding the average spender plans to spend £285, if they put away just over £25 each month it could allow savers to have their spending money by December 2021.

Ellmore said: “Lots of organised people will stock up on gifts and other festive supplies in the January sales, but it’s even better just to start putting a little bit away each month in a designated savings account, and then you will have a nice lump sum waiting for you next Christmas.”

About the research

The market research was carried out between 17th and 21st November 2020 among 2,000 UK adults via an online survey by independent market research agency Opinium. Opinium is a member of the Market Research Society (MRS) Company Partner Service, whose code of conduct and quality commitment it strictly adheres to. Its MRS membership means that it adheres to strict guidelines regarding all phases of research, including research design and data collection; communicating with respondents; conducting fieldwork; analysis and reporting; data storage. The data sample of 2,000 UK adults is fully nationally representative. This means the sample is weighted to ONS criteria so that the gender, age, social grade, region and city of the respondents corresponds to the UK population as a whole. These questions focused on a collection of 1,754 people within the sample who celebrate Christmas.

About the author:

Rachel Lacey is freelance journalist with 20 years experience. She specialises in personal finance and retirement planning and is passionate about simplifying money matters for all. Read more

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