Brits urged to put cash away for Christmas now to stop debt - how to start saving

The financial impact of Christmas continues to be felt by many UK households long after the festive decorations have been taken down. New research from credit management company Lowell shows that most Brits who used credit to fund their holiday spending will only just clear their debt by April 18.

Lowell's study found that nearly three-quarters (74%) of UK families turned to credit cards, Buy-Now-Pay-Later schemes, and other forms of borrowing to cover the costs of Christmas 2024.

Given that the average festive spend accounted for more than half (53.6%) of a household's monthly income, families have typically spent the past 16.5 weeks gradually paying off the season's expenses.

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However, for some, the financial burden is set to continue even longer - 15 per cent of families predicted it would take six months or more to pay off their festive debt when surveyed in Autumn 2024, suggesting they'll still be dealing with Christmas costs well into the summer.

This extended repayment period reflects a wider trend of financial pressure across the UK. New data from Lowell's Financial Vulnerability Index shows that roughly one-in-three UK adults (29%) are in some form of arrears, with single parent families being the most likely to have missed a payment, as 54 per cent reported missed payments in the past 12 months, reports .

The report has uncovered that Brits aged 35 and over are feeling the pinch, with many sensing they're financially worse off compared to last year at the same time. With summer on the horizon, families are girding themselves for a hit with soaring , Council Tax, and water charges threatening to stretch household budgets to breaking point.

In response to these financial pressures and changes in welfare support, money-savvy experts are urging people to start planning now for Christmas 2025. The advice is clear: adopt smarter spending habits early and commence budgeting to avoid the trap of enduring debt.

To strengthen financial resilience, the debt management company Lowell is collaborating with the financial education charity MyBnk. This partnership is shining a spotlight on strategies families can employ to stay ahead in their economic planning.

MyBnk's CEO, Leon Ward, pinpointed the impact festive splurging can have on finances, stating: "The Bank of England reports that we spend 29 per cent more in December than in other months, which can put pressure on family budgets. Some manage this through saving and planning, while others may resort to using credit facilities."

Ward has emphasised the vital role of demonstrating good money habits, particularly around Christmastime. He commented: "While modelling positive financial behaviours is ideal, the Christmas season can add additional pressures that can have a knock-on effect into the following year. Open conversations about the value of money and money management strategies can help children learn from real-life experiences, especially when it comes to seasonal spending."

How to fend off Christmas 2025 debt

With an eye to keeping holiday-related debts at bay, Lowell and MyBnk offer several pointers for keeping your finances in check as you save for Christmas.

Start a Small, Manageable Savings Pot

Even a small amount like £5 a month can accumulate over time. Establish an automatic transfer to a savings account or utilise round-up savings to create a Christmas fund that grows throughout the rest of the year.

Use Credit Wisely and Plan for Repayments

If using credit is inevitable, consider low or 0% interest options and devise a feasible repayment plan to prevent long-term debt. Make it a priority to pay off Christmas expenses before incurring new costs.

Set Expectations Early with Family and Friends

Establish spending limits, Secret Santa, or homemade gifts now to alleviate financial stress later. Many people feel the same but are reluctant to suggest it, so take the initiative and ensure a fun yet financially manageable festive season.

Spread Out Shopping and Watch for Genuine Deals

Take advantage of sales events like Amazon and , but only for items you've planned to buy. Verify discounts to avoid 'fake' sales and impulse purchases.

Also, consider accumulated loyalty rewards and points from , such as Rewards, which can build up throughout the year and significantly reduce your festive food shop in December.

Practice 'Loud Budgeting' this summer

The onset of summer can often bring with it added social pressures and, for numerous individuals, there might not be additional wiggle room in the budget. Being candid about one's financial goals—like keeping up with essentials, steering clear of debt, or squirrelling away funds for Yuletide—is beneficial in reducing this stress.

Encouraging open discussions about finance can make it simpler to establish spending limits, without the associated feelings of isolation or exclusion.

John Pears, the UK CEO at Lowell, commented: "Many families are still dealing with the financial fallout from Christmas well into April - or beyond. Priority bill increases mean it remains tough for many to manage, so it's more important than ever to plan for that festive spending now to help lessen the burden later in the year."

Anyone feeling financial pressure is urged to reach out to Lowell for support, full details on their website