Empowering the Freelance Economy

How freelancers can avoid a festive debt hangover

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Sarah Coles, senior personal finance analyst at Hargreaves Lansdown offers some tips on how you can halt unnecessary festive borrowing and avoid a debt handover

The rising price of everything has sent the cost of Christmas through the roof, so the average person will spend £576 – rising to £772 for those with children at home. This means that the number of people who say they can cover at least some of the cost of Christmas from their income has dropped dramatically – from 55% to 45% over the past year. Among those with children living at home, it drops to 37%.

“Christmas is traditionally a time for waking up with a sore head and a few regrets, but while it’s manageable when it’s a case of too many sherries, it can be far more agonising if you’ve overdone the festive spending,” says Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.

This year it’s a particular risk, she warns, so before it’s too late, it’s worth being aware of the potential pitfalls, and how to avoid them.

Can you relate to any of the following stats?

  • This year you feel like you can cover less of the cost of Christmas from your income than last year
  • You will put some of your Christmas spending on a credit card. One in seven people (15%) put at least some of their Christmas spending on a credit card – this rises to 18% among men and parents.
  • You are considering using a buy-now-pay-later service. Almost one in ten (8%) will use buy-now-pay-later deals for Christmas. This rises to 15% among those aged 18-34 and 14% for those with children at home.
  • You’ll use a story card to pay for Christmas. One in 20 (5%) will use a store card to pay for Christmas. This rises to one in ten of those aged 18-34.
  • You may have to borrow from family and friends to cover the cost of Christmas. One in 30 (3%) will borrow from family or friends. This rises to 8% among those with children living at home.
  • If you are a higher-rate taxpayer you are less likely to pay for Christmas out of your income, and more likely to borrow. One in five use a credit card (19%), 13% use buy-now-pay-later and 11% a store card.
  • You have not planned for Christmas spending yet. 11% have no idea how they’ll pay for Christmas – which may well mean these people end up borrowing.

Figures from a survey of 2,000 people by Opinium for HL in September 2022


There are a few ways to keep debt to a minimum, even if you’ve already spent more than you meant to, says Coles.

“However, if you need to borrow, it pays to plan it carefully, so any debt hangover is less painful, and doesn’t linger for months,” she says.

Photo by Andrea Piacquadio via Pexels

Coles offers some tips to consider if Christmas spending could create a handover of debt and doubt.

How to cut down on festive spending

  1. Work out where you stand

If you’ve started borrowing already, or are rapidly running out of cash, stop and take stock. Consider what you’ve already bought, what money you have left – if any, and what else you definitely need to get.

  1. Consider the cuts you can make

When you’re listing the things left to buy, consider whether you can avoid any of them. If you need to get food and drink, can you ask family to bring something with them? If you have presents left to buy will some of those people agree to skip gifts this year? If there are events that will cost money, which ones go you most want to go to, and which ones can you miss?

  1. Try ‘unshopping’

Cuts should extend to things you’ve already bought. If you’ve overdone it, what can you take back? Alternatively, are there any people you could agree not to buy for, and return their gift or give it to someone else instead?

  1. Don’t be afraid to say no

The power of ‘no’ is life-changing when it comes to spending. At Christmas, we somehow feel we’ve failed people if we don’t attend everything we’re invited to, or buy everyone their must-have gift. Saying ‘no’ means you can stay within your budget – and you don’t ever have to suffer through a social event you’d rather not go to.

  1. Be upfront

Not having the cash for Christmas is something a huge number of us face this year, so don’t be afraid to be honest with your loved ones. You could agree to celebrate with some people in January or February instead, when your finances are closer to normal. Or you could agree to skip presents, or go for a pared down dinner. Most people would rather you avoided difficult debts than bought something you couldn’t afford.

How to avoid a festive spending hangover

If you do need to borrow, Coles suggests you think carefully about the most sensible way to do it.

  1. If you need to put it on a credit card, don’t pay an exorbitant rate

If you just borrow on an existing card you’ll usually pay interest at 22%. If you know you’ll need a card, plan ahead for it so you can apply for one with a low rate, or a 0% deal on purchases for long enough to have paid it off. Once you get a card, don’t think of your credit limit as your money to spend – every penny is more debt you’ll need to work hard to pay off, so consider everything you spend carefully.

  1. Don’t just make the minimum repayments

Your credit card company only requires a minimum repayment each month – which can be 1% of the debt, plus interest, or £5 – whichever is lower. This can feel like a small price to pay for carrying debt – and can make us feel we’ve got thousands of pounds of debt under control. However, if you don’t pay it off faster than this, you’ll rack up enormous interest charges. You shouldn’t be borrowing anything without having a plan for paying it back.

  1. Don’t just fall into your overdraft

If you haven’t arranged an overdraft (or you go over the agreed amount), spending more than is in your account won’t just rack up interest, you’re also likely to have any direct debits rejected, and your bank may charge a fee. It will be noted on your credit score too, which means it could be harder to borrow in future. Even if you have agreed an overdraft, the rates are exorbitant.

  1. Don’t pick up a store card for a special offer

When you’re offered a store card at the till in return for a discount, it seems like easy money. However, if you can’t clear the debt within the first month, and you end up paying 40% interest for months, you’ll bitterly regret having been tempted in the first place.

  1. Don’t be blasé about buy-now-pay-later

It’s easy to think that because there’s no interest on these deals, it’s not really borrowing, and there’s no cost. However, these are debts, and because there are only light credit checks when you take them on, there’s a risk you rack up more than you can afford. If you use this form of borrowing, you need to consider how you will afford all the repayments. You should also keep detailed records of all the money you are borrowing, so you don’t accidentally take on more debt than you can afford.

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