Crunch time this Christmas

A survey by Norwich and Peterborough Building Society (N&P) has revealed that the current financial climate has forced some people to rethink how they will splash the cash - with more than half of those polled revealing they are planning to be far more frugal with the festivities this year.

Customers feeling the pinch have said they plan to cut their gift budgets, buy less food and drink, and even have a go at making presents themselves.

57% of those polled said they were planning to spend less this Christmas and of those, 68% said that they would make savings by buying cheaper or fewer presents. 48% revealed they would buy less food or forego meals out in order to save money, while 16% were planning to miss out on parties as a way of saving cash. 10% weren't planning as many, or any, decorations this year.

However, of those customers who said they would be spending the same as usual on Christmas 2008, 58% said they could do so because they had saved up for the festive season all year round. 17% put money away from the summer time onwards, while 19% said they started saving three months beforehand. 6% put money by for Christmas a month before the festivities begin.

Of those who said they did not save up specifically for Christmas, 22% said they would use their credit card to cover the cost, while 13% admitted they would have to use their overdraft facility. But the majority (47%) said they would dip into existing savings.

As for how much people are planning to spend this year, 38% of those polled said they were expecting to spend up to £500, while 36% anticipated their Christmas costing between £500 and £1,000. 17% would spend between £1,000 and £1,500 and 6% would face a total bill of between £1,500 and £2,000. The remaining 3% were looking at spending between £2,000 and £5,000.

N&P's savings products manager Gary Lacey said: "The results of the survey show us that putting money into a savings account on a regular basis seems the best way of making sure this Christmas will still be a merry one, despite the turbulence in the financial markets and the increased cost of food and utility bills.

"N&P's range of savings accounts - including its popular Family Regular Saver, which gives people a great rate with easy access, and can be opened with as little as £1 - is a good way to make sure everyone gets a treat at Christmas.

"Maybe families can make it a New Year's resolution to open an account and start putting money away for Christmas 2009."