Screwed up your Christmas finances? Here’s how to fix it

It’s, very, very common to find yourself overspending in November, December, through the Christmas period and into the New Year. Every now and again we all eff something up, we’re human aren’t we?

Sometimes it’s a small slip up, and sometimes it’s spectacularly bad. Either way, here’s what to do if your budget got away from you over the festive season and you screwed up your Christmas finances.

Step 1: Own it

I’m not saying you should be beating yourself up or feeling guilty about the situation – that sometimes makes things harder to deal with – but it’s good to accept that this is a real issue.

The problem exists. Try not to be in denial about it, and most importantly take ownership of it.

Step 2: Quantify it

As tempting as it may be to stick our heads in the sand, let’s look the situation dead in the eye – face it down.

Exactly how much do you owe? Who or what do you owe the money to? What’s the interest rate, if any? You can’t take sensible, effective action until you know, so find out.

Step 3: Get perspective

How serious is the situation, in practical terms? For example:

• Can you pay all the extra money off this month when you get paid?
• Can you tighten your belt and budget a little harder this month and next month and clear the whole thing?
• Can you pay all of it off with any savings, then rebuild the savings over the next few weeks or months?

If you can say yes to any of the questions above, this is an annoying but fixable issue.

If you can’t answer these questions easily or make a quick and practical plan to clear up the situation, you could be looking at a more serious problem. 

Step 4: Get help if you need it

If you need some extra help, make sure you go to a charity or other non profit organisation. They’ll help you with support, advice and tips, and help you communicate effectively with your creditors if needed.

Steer well clear of commercial loans companies or debt consolidation businesses when you’re looking for basic advice and assistance. Try StepChange debt help charity or Citizens Advice for unbiased and reliable information.

Step 5: Make a specific plan

Work out exactly how you’re going to fix the situation. The details matter, so be specific about what you’re going to do and when.

Re-draw your budget and decide how to pay off any excess borrowing, looking at amounts of money and a specific timeline. If you’re paying debts off out of your savings, work out a plan to replenish the savings.

You may also want to:

• Try a week of extreme budgeting, such as a Tenner Week challenge.
• Give up a bad habit for a week, a month or longer – for example, having fewer takeaways, buying fewer clothes, or staying away from online shopping.
• Look for places to cut back in general, such as trimming your grocery bill or changing your energy or entertainment providers.
• Sell unwanted possessions or take on some paid overtime at work to get some extra quick cash coming in.
• Switch any expensive borrowing to lower interest or interest free borrowing (if it’s something you won’t be able to sort out quickly).

Step 6: Stick to the plan!

Monitor your progress with an app, a spreadsheet or an old fashioned notebook, and it’ll help you stay motivated.

It might not be the most scintillating thing in the world to be plodding along with, but after you’ve sorted out the financial mess there will be a sense of both satisfaction and relief. 

Work out how to avoid a repeat performance

If you’ve had to dig yourself out of a hole then it isn’t exactly a whole lot of fun, so you might as well do whatever you can to avoid going back there. Time for a few tough questions.

Where did the extra money go?

• A few large purchases?
• General dribs and drabs?
• Christmas gift overspending?
• TikTok or Instagram-inspired impulse purchases?
• Catering and hosting or meals out?
• Party clothes?
• An unexpected expense (car repairs, broken down boiler)?

Sometimes our money circumstances are at least partly beyond our control, but sometimes the problem lies with us. Work out what happened, and have a think about you might do things differently next time around. It could be a matter of changing spending habits, getting more insurance, or building up a bigger emergency fund or household expenses fund.

If it’s just the festive season itself, you might like to try saving up a little each month towards those festive expenses in 2026, once you’re back on an even keel financially. That way you won’t get such a shock next year when the bills roll in during the following January and February.

Did you overspend over the Christmas and New Year holidays? A little, or a lot?