Why it pays to budget for Christmas now - with 10 top tips to help

According to research, last year families spent around £820 on Christmas on average, and it is becoming increasingly common for people to put the festive season on credit.

But with some planning ahead, it may be possible to build a pot of cash and make savings here and there which will stop you forking out more than you need to.

If you're visiting loved ones this Christmas for example, booking travel tickets ahead could help to ease the costs.

Sarah Coles, a personal finance analyst at Hargreaves Lansdown, says: "Around one in three people end up putting Christmas on credit, which can prove expensive.

Given that you have a bit of time until Christmas, you can use the opportunity to put some cash aside, and use a few cunning tricks to boost your Christmas savings, so you can celebrate this year without breaking the bank."

Here are 10 top tips for building up a money pot for Christmas:

1. Save money each month

Set up a standing order to put money into a savings account as soon as you are paid each month, so you're not tempted to spend your Christmas savings.

Alternatively bank a little money each week. You'll be surprised how quickly your savings will have grown by the time Santa is making his way down the chimney.

2. Consider microsavings

Some banks allow you to round up each spend to the nearest pound and save the rest, while some apps regularly take small sums of cash from your current account and put them into savings for you.

The idea is that they're so small, you don't miss the money – but large enough to add up.

3. Switch current accounts

Some current accounts offer interest rates of up to five per cent, while others will give you a bonus for signing up to kick-start your Christmas savings.

M&S Bank, for example, will offer a £125 M&S voucher for switching, and another £60 voucher after you've stayed for six months. It's not a good idea to switch for a bonus alone, but if the account itself suits you, it's a nice extra for Christmas.

4. Have a pre-Christmas clear out

Have a look through the cupboards for old presents and things you haven't used since last Christmas. If you sell them on auction sites or specialist sales sites, you could raise a handy lump sum.

5. Try trading down brands

If you buy branded goods, try the own-brands. If you buy own-brands, try the basic range. Alternatively, give a discount supermarket a try.

You're unlikely to like everything you try, but you may find everyday savings you can take advantage of for life – and in the interim you can cut your grocery bill by 10 per cent or more and put the savings aside for Christmas.

6. Cut out the small luxuries for a couple of months

This doesn't have to involve a major sacrifice, but if you were to drop a family takeaway once a week, a daily coffee, and a drink after work on Friday, you could put aside an extra £200 a month, which would boost your Christmas savings nicely.

7. Start with the budget – not the wish list

Once you've established your savings strategies, you'll have an idea of what you can afford to spend: This is where you start – not the big list of things you ideally want to buy.

If you don't have enough cash to cover the wish list, you can then decide either to cut back on each gift, or chat to people you know well enough and agree not to buy for one another this year. Who knows, they may be just as relieved by the idea as you are.

8. Cashback websites

Sign up to one or two cashback websites, and whenever you shop for anything between now and Christmas, you'll get some cash back.

The amount of cash will vary, but can be up to 15 per cent. Even if you were to get one per cent cashback on £500 of spending, it's still a £5 voucher, which will come in handy.

9. Cashback credit card

This offers similar benefits, but comes with a major caveat: If there's any chance you won't pay this off in full and on time every month, then give it a wide berth – or you'll quickly spend far more in interest than you'll ever make in cashback.

10. See people in the New Year

Not only will this give you another pay day to cover the cost of their present, but it gives you the option of re-gifting if your budget is really stretched.