The holiday season is fast approaching and the if you’re thinking, how the heck am I supposed to afford this?
You're not alone. Americans alone spent over a trillion dollars last year during the holidays. And with everything from food to Christmas cards to Christmas gifts to airline tickets getting more and more expensive it is extremely intimidating to even know where to start.
But rest assured. We got you covered. Because together we are going to come up with a plan for a Christmas budget so by the time you’re done reading this you will be ready to attack the holidays without going bankrupt.

How to create a Christmas Budget
Creating a Christmas budget is similar to creating a monthly budget. The only difference is you are going to set up categories for your Christmas spending.
When creating a Christmas budget it is important to keep things as simple as possible. Similar to how we set up our monthly wealth tracker you should be doing the same when figuring out how much you can afford and tracking your spending.
Below is a snapshot of some of the steps that you should be taking when creating your holiday budget.
There are key things to keep in mind when figuring out how much you can afford and tracking your spending-some of which include setting up categories for your Christmas spending and keeping things as simple as possible with your budget.
But first
Why should you create a Christmas budget?
Now all of us know that trying to save any extra money around the holidays is extremely challenging.
And if you’re feeling like this may not be worth your time, then let us give you some motivation for creating a Christmas budget.
First, setting budgets can help you save a ton of money. Simply thinking about how much you will be spending can help you implement some simple tricks around the home to reduce the amount of money going out.
Second, setting a budget for yourself can help bring order and focus into your life that is crucial when all your daily activities are hectic with holiday obligations.
And lastly, setting budgets can also help keep you sane.
Creating a Christmas budget forces you to think about how much money you will be spending on various things and making sure that you won’t overspend.
So now that we have given reasons why creating a budget is beneficial let’s get into some simple steps for creating your first-holiday budget.
Creating a Christmas Budget
Creating a Christmas budget is a lot easier than you think. And it can be broken down into ___ easy steps.
First, create categories for the different types of spending that you will be doing during the holiday season.
Think about everything you will be buying and give it its own category so that you can track your spending throughout the month.
Next, think about where you could cut back on spending this year to help reduce the amount of money you will need.
For example, if you usually purchase gifts for your extended family members think about ways to cut down on this cost. You could tell everyone to buy only one gift each or spend less than you usually would.
Finally, create a budget for yourself to track how much you’ll be spending in each category throughout the holiday season. You can do this with a budget planner or just a pen and pad. No need to make it complicated.
Let's go into each of the steps in more detail.
Make a list, and check it twice
Before you even start thinking about money the first thing you want to think about is your goals for Christmas.
These goals can be broken up into a few different categories. These categories will be affected by how big your family and festivities are.
As well as what your personal Christmas celebration style is.
For example, if you have a large family that is coming over for dinner then food would likely be the biggest expense in your budget.
Or if you prefer to go out to enjoy the festivities then you may need a big pot for transportation and/or entertainment costs.
Here are some categories to consider
Christmas Activities
So this can be anything from events you want to plan, travel, and even parties you would like to host.
Christmas Decorations
This category can be broken down even more which may include anything from a tree to homemade decorations.
Christmas Parties and Gatherings
Even if you decide to not have any of these it is always good practice to budget just in case. Things might come up that could force you into having a party but being prepared never hurt anyone.
Christmas Gift List
This category is probably the most common one for this holiday. After all, Christmas is about giving right?
Write down everyone on your list. You can pare it down later. The goal is just to get everything on paper so you know what you're dealing with.
Christmas Food
This includes all the food you will be preparing for your guests and even what you might want to pick up while grocery shopping.
Christmas Entertainment
This is for anything you might want to do outside of the house that will cost money. It can be shows, outings with friends to celebrate or even treating yourself to a holiday beverage at your favorite coffee shop.
Christmas Travel
If you are traveling to celebrate Christmas with family, friends, or even just yourself this will be the cost of transportation.
Make a list of all these things and jot them down in your goal tracker. Check this Christmas Planner which is a great place to keep track of everything.
Once you have your list it is time to take a look at it and highlight the things that are most important to you. You can rank them or I just like to take a highlighter and highlight the things that jump out at me.
I usually will divide my list in half. So must vs. would be nice.
And now it is time for the fun part. Let’s talk about money.
What’s a good budget for Christmas?
Sorry to break it to you. But I don’t have a magic number for you as to how much you should spend.
However, I can tell you that a good budget for Christmas is going to be based on what you can afford.
Plan how much you are going to spend
Americans on average are said to spend about $1000 on Christmas. However, that doesn’t mean that needs to be your Christmas budget.
If that number sounds crazy to you then come up with a number that makes more sense.
Start with looking at your existing budget. Do you have any categories that are flexible and can be moved towards your holiday budget category?
Do you have existing savings that you can use towards holiday expenses?
If you’re staring at your budget and thinking… um no. I have no extra cash just lying around.
Consider doing a savings challenge. Where you set aside a set amount of money until you hit your goal.
Whatever number you come up with make sure it is realistic.
And then work on ways that you can make things work within that budget and not the other way around.

How much should you spend on a Christmas gift?
Ok. So now you have an idea as to how much you have to work with but the big question is how much do you spend on gifts.
You have your shopping list. And you have your Christmas budget. So now it is time to start dividing things up.
First, you want to focus on all the things that you have made a priority. And that includes people.
As you’re going down the list you may realize that there are some things that maybe you didn’t think of and if money is tight you may need to get creative.
When deciding how much to spend on gifts it is going to depend on how much you have to allocate.
So for example if you have decided you have about $100 to spend on your gift budget and you have 10 people on your list then that is going to work out to $10 per person.
You can start there. You don’t need to go into a bunch of math. But be flexible within your budget.
For example, maybe you decide to do a white elephant gift exchange with a $20 limit for all the adults in your family which knocks out five people from your list.
So now you have $80 left to spend on the five remaining people.
Having everything on paper makes things a lot easier so that you can actually track what you're spending, where it is going, and how much you may potentially have leftover.
Keep track of your Christmas Spending
Once you have your plan of attack the next step is to keep track of everything. Note how much you're spending.
This is important not just to make sure you stay on budget but is also helpful in instances where you end spending less than you projected.
This leaves room for things that might be more costly. Or even better. Maybe you can move something to the priorities list that you weren’t able to afford otherwise.

Ways to avoid emotional spending during the holidays
It’s a known fact that the holidays are not great for our pockets.
This is why it is important to stay on track with your holiday budget.
But this time of year can also be emotionally charged. You may find yourself purchasing for people you normally wouldn't or buying gifts that aren't as special as they once were.
Before you go out make sure you take your time when making out your Christmas budget and make sure it is something you feel comfortable with.
This will help you feel more confident about your shopping decisions.
Spend some time reflecting on the season and think of creative ways to give gifts within your budget.
Budgeting can help you stay on track and not overspend.
So if you find yourself emotionally spending then don’t beat yourself up about it. We all do it at one point or another.
How do people afford Christmas on a tight budget?
Planning ahead is probably the best advice for those that are on a tight budget. The reason being is that the sooner you start setting aside cash for the holidays the less intimidating it is.
However, even if it is well into December and you’re currently reading this that is ok. There are still ways that you can save money and find ways to celebrate while not going into debt.
Consider a gift exchange
Instead of trying to buy gifts for everyone get your group together and do a gift exchange instead. This is a great way to spread the holiday cheer while still saving money.
This works great for work colleagues and friends. But you can also coordinate it with the adults in the family as well.
The Four Gift Rule
For kids, and younger family members the four-gift rule is a great way to keep things under budget by giving both things the young ones want as well as need. So the rule goes something they want, something they need, something to wear, and something to read.
Dig into your wallet
When was the last time you cleaned out your wallet?
This might sound so random but hear me out.
Every year around the holidays I clear out my wallet.
Why?
Because that is where gift cards and gift certificates go to die. And these gift cards are like finding extra money that you can put towards your holiday needs. Give it a go. You never know what you might find in there.
Credit cards can be your friends
Don’t panic. I said the c word. I know. But if used properly credit cards can actually be a great benefit and money saver during the holiday season.
First, check to see if you’re card offers reward points. You actually may have rewards or cashback that you can redeem and put towards some of your holiday purchases.
Secondly, keep an eye out for holiday promotional emails from your credit card company. While this takes a lot of discipline taking advantage of double/triple points and cashback opportunities is a great way to shave off a few dollars from your purchases.
Just make sure that if you put stuff on your card you can pay in full at the end of the day. Debt costs money and if you hold onto that balance all those savings are going to go out the window.
Look for Discount Code
Websites like RetailMeNot have discounts in every category imaginable.
Check it out before you start Christmas shopping online because you may score some major deals that way.
Also, go check out your favorite retailers for promo codes when you’re browsing. If they don't offer free shipping you can always search for coupon codes available to get free shipping as well.
Save on Wrapping
Fancying up your gift wrapping can definitely add some style points.
But it doesn't have to cost you an arm and a leg either.
There are ways that you can still look good when wrapping your presents without the price tag. Also, it is super fun!
You can use creative patterned washi tape instead of bows.
Reuse packaging from previous gifts.
Get inventive with objects you have around the house, like paper grocery bags, newspapers, or old magazines.
Wrapping paper is a bit expensive if you’re trying to stay on budget, but there are some creative ways that you can keep it stylish without breaking the bank.
Get creative
Creativity can go a long way. Both with gift-giving and entertaining. Homemade gifts are a great way to stretch that holiday dollar.
However, before you crochet an afghan for your 16-year-old niece make sure that it is something they would appreciate.
For example, if your niece loves cookies a homemade cookie recipe including ingredients can be a great gift idea.
Handmade scarves and gloves are always a nice treat for those that live in colder climates.
Not crafty?
You can still be creative by putting together baskets with smaller items to create an experience. So for example microwave popcorn and a dvd (do people still watch DVDs) for a move night. An inexpensive bottle of wine with cheese and crackers for a date night.
Think of experiences and come up with ways that you can box them or bag them up with a little note. These can make for great gift ideas.
Dollar Store Decor
Many people focus on gift-giving when they are trying to scale back their budget but decor can really add up. Instead of blowing your budget on pricey holiday decor check out the dollar store.
With a little creativity, you can easily decorate for the holidays without breaking the bank.
I’ve done a full Christmas tree with just decorations from the dollar store. (Or check out this set from Amazon that has over 100 pieces) The things you’ll find will really help to minimize your holiday spending.
Bonus: The dollar store is also a great place for stocking stuffers for all ages.
Entertaining on a Budget
This can be the biggest spend for some families but it doesn’t have to be. There are ways that you can still treat your family to a holiday meal without breaking the bank.
Host a brunch
Brunch is way cheaper than dinner. So if you are looking for a way to cut costs then consider doing a Christmas morning brunch. This recipe is one of my fave and a crowd-pleaser.

Shop Sales
When planning out a holiday meal start by making a list of what you want to make and what you will need in order to make it.
In the days coming up to Christmas pay attention to what is on sale at your local supermarket. Chances are they will have great deals on traditional items.
Start early and buy what’s on sale so that you are not scrambling to buy things last minute and spending extra.
In the alternative, you can do what I like to call shop the sales. See what is on sale and come up with menu ideas around it. So for example if your supermarket has great deals on turkey look up recipes for turkey. You will be surprised at what kind of fun meals you can create just by shopping the sales.
Free Christmas Ideas
And when all else fails free is our friend. And there are plenty of ways you can have a lot of fun without spending a ton.
Take a tour of the neighborhood
If you’re looking for a fun activity to keep the family occupied go for a walk in the neighborhood at dusk.
This a great time to check out your neighbor’s decorations and ooh and ahh over all the cool lights and setups.
Watch a holiday movie
Ok, so this might cost a little bit of money if you are purchasing snacks and beverages but gather the family, put on your favorite pajamas, and watch your favorite holiday movie to get all the holiday feels.
(Can someone say Charlie Brown Christmas. Amazon actually has it on DVD here.)
And don’t forget to have fun
The days coming up to Christmas can be very stressful. With keeping on budget during the gift-giving season, preparing for holiday events, and keep track of everything it can be very overwhelming.
But don’t forget to live in the moment. The holidays is not just about spending money.
Enjoy the time with friends and family and focus on this amazing and magical time of year. There is a reason why they are called Christmas presents. Cheers to a debt free christmas.
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