How To Plan Your Christmas Budget

Wondering how to plan your Christmas Budget without breaking the bank? We got you covered! Check out this comprehensive post that will save your finances during the holidays.

The holidays are right around the corner, and you’re probably wondering how to plan your Christmas budget to avoid breaking the bank…but still getting gifts for your family and friends, and indulging in a scrumptious dinner. 

December is one of the most expensive months for the average American, but it’s mostly because the majority don’t know how to budget for Christmas, and usually end up spending way more than it’s even necessary. 

Image of a pink piggy bank with a Christmas hat on it inserted in a post about planning a Christmas budget.

Planning your Christmas expenses also means that you’ll be much more organized on what needs to be bought, prepared, and arranged, helping you escape that dreaded stress that all too often is part of the deal during the holidays, and more importantly: avoid debt at all costs! 

Sit back, grab a cup of coffee and a gingerbread cookie, and start reading…you’ll be embracing the Christmas spirit in no time!

Start Planning in Advance

Time will be your best friend when planning (and sticking to!) your Christmas budget. The more in advance you start, the easier it will be to enjoy a stress-free and within-your-means holiday. 

The first step to getting Christmas gifts on a budget is to decide how much you want to spend on each – and you have to be realistic! Granted, your children’s presents will probably cost more than your mother-in-law’s or your co-workers’, so the budget for each gift will vary greatly. 

Still, it’s important to know how much you’re willing to spend on them, and to write those numbers down in advance. As a bonus, creating a list of gifts will help you avoid forgetting people!

You’ll also want to buy your presents in advance; it’s not enough to create a list in May but wait until December 15th to start the shopping

If you do it well, you could easily get to the holiday season with most of your gifts already wrapped and paid for, a huge contributor to lowering that budget for Christmas. 

This will not only help you avoid facing a massive bill for presents, but also find much better prices (and none of the crowds at the stores!) 

When you’re planning to get Christmas gifts for your family on a budget, you won’t only be allocating a higher amount of money for them, but they’ll probably need more thought and care than others; I’m guessing you don’t buy your husband’s or kids’ presents on a whim! 

But the other presents that you may need to get for an attentive neighbor or your babysitter, which don’t require that much effort, are the perfect ones to start collecting throughout the year. 

A great tip for Christmas shopping on a budget is to get most items as early as you can. And as you’d do with any budget, don’t forget to track your spending!

You could also consider looking for DIY Christmas gift ideas on a budget, and making them yourself. Who said presents can only be found at the stores? 

Advance planning is not only about presents, though, because they’re not (by far!) the only expense you’ll have during the holidays. But they’re the only ones you can actually pay for before December knocks on your door (because who buys the turkey in mid-August?!)

Get them out of the way, and then focus on budgeting for the rest of the expenses, which also need to be closely monitored. Think of work dinners, events, charity fundraisers, gift exchanges with friends…How much of your budget can you realistically allocate to each of them? 

Knowing your financial limit for said events is crucial to avoid overspending when the time comes, which you’ll probably do without realizing if you don’t hold yourself accountable. So, how much can you (or are willing to) spend on these celebrations? 

Figure it out, and then keep your related expenses below that number, even if it means having to sacrifice some of the parties or activities proposed by your social circles. Sometimes it’s ok to say no, especially if it’s your financial health that’s at stake! 

You can’t possibly escape dinner at home, though. But how do you plan Christmas dinner on a budget? Well, you’ll also be budgeting for food and drinks, regardless of whether you’re hosting or just contributing a dish or dessert to your sister’s party.

If it’s within your means (and I mean culinary skills + time) cook the casserole or cranberry sauce yourself, instead of buying it at the store. In most cases, it will be cheaper (and way yummier!)

If you’re organizing a Christmas party on a budget, ask your guests to bring their staple dishes or pies, so you don’t have to cover all the food and drink expenses yourself. 

Bonus Tip: If you have no ornaments from previous years, aim to buy some budget Christmas decorations in advance as well. And then save them for next year, and the next one! 

Take Inventory

Another important thing to consider when budgeting for Christmas is inventory. Taking inventory of everything you already have, and what you’ll need to buy will help you budget correctly, avoid last-minute surprises, and also unnecessary purchases. 

You might propose to spend $600 overall on your Christmas shopping, but later realized you’d not counted on so many things you needed to buy or spend on, and end up going way over the budget, which wasn’t accurate in the first place

Spoiler alert: There’s no such thing as a magical Christmas budget calculator that will do the job for you. It will be up to you to discover how much you can afford, what you should allocate to each category, and what you actually need or already have. 

So make a Christmas budget list with all the expenses you’re likely to have, which you’ll then plan for as suggested in the previous point. Here are a few to get you started: 

• Gifts – and a list of all the people who’ll get them

• Decoration – from Christmas lights to ornaments, mantelpieces, and festive napkins.

• Cards + Postage

• Food  – are you entertaining and supplying dinner for everyone? Taking your famous dish over? Buying champagne and dessert? From aperitivo items to pie, and the signature coffee you like to splurge on for Christmas morning, everything edible goes here.

• Charity Donations

• Events – going out for dinner with colleagues, pre-Christmas parties…you get the gist.

• Transportation – will you be flying to another state for the holidays? Going on vacation instead of celebrating at home?

• Splurges – it’s the holiday season, so it’s natural to feel an urge for having hot chocolate every evening at the Christmas markets, or buying yourself a new music album or winter jacket, or ransacking the local bookshop. 

If you’re wondering how to afford Christmas while giving in to these treats, I’ll break the good news to you: As long as you plan for your indulgences, you’re good to go!

Remember to be specific: the more so you are, the fewer ugly surprises you’ll encounter when the time comes. 

Taking inventory will allow you to cross out items on this list, as you may have added things you actually already have (and that’s why it’s great to save objects from one Christmas to the next one). 

Maybe for decorations, you only need new lights because the ornaments and wreath for the front door are sitting in the basement. Or you have a stack of blank cards from two Christmases ago waiting to be written on (and no, you really don’t need to personalize your cards with new pictures every year. Your Christmas budget planner certainly doesn’t need you to!)

Maybe you had started buying (budget) gifts for friends or relatives in advance and you completely forgot about them! Take inventory, and remove those things from the budget. Yey!

Discard Non-Essential Traditions

Image of Christmas stockings hanging on top of a fireplace inserted in a post about planning a Christmas budget

Sorry, but not sorry. Regardless of how cool certain Christmas traditions are, it’s more important to think of the bigger picture (aka your financial goals!) and get rid of the habits that don’t really contribute much but are taking up a lot of your budget. 

Some of those traditions may even be imposed by society (personalized cards, I’m looking at you!) and not customs that have an important meaning to your family, so for the sake of your budget, is time to bid them goodbye. 

Every family has their own, so you’re gonna have to go through yours and discover which are the ones you can live without, and which can alleviate the holiday expenses, but some of the most common include: 

Cards with photos – You absolutely don’t need to print new cards every year with a picture of your family to let your loved ones know you’re thinking about them this holiday season. And this doesn’t mean you’re supposed to stop altogether!

If you love dressing up and customizing your cards, you can easily do it (for free!) online, and then email them to your friends and relatives. 

Love to hand-write and post your letters? Get a stack of blank cards, and personalize them yourself with drawings or paper mache: chances are they’ll be even more of a success than your ordinary ones! 

If the meaning behind the cards is the message you want to send your friends, write them a heartfelt email or text message that tells them how much you care. 

They’ll be very appreciative, and your bank account will be even more. 

Personalized Stockings – Another unnecessary tradition. Stockings are meant to hold candy and trinkets, and while it’s nice to have your kid’s face or name in it, their whole purpose can be served without it. 

You probably have stockings from past Christmases laying somewhere (and if you’re adamant about them being personalized…well, you probably did that last year, didn’t you?) Dust them off: they’re ready to shine again this Christmas

If you don’t have stockings and it’s not a vital decoration for you, you can get creative and figure out your own version of them. Or not have them at all, it’s entirely up to you! 

Ugly Sweaters – How does having a closet filled with ugly sweaters that you only used once sound? Yes, I thought as much. If ugly sweaters are non-negotiable for you, get one and reuse it every Christmas. It’s been a whole year since the last time, no one will remember (or care!)

Now, get ready for one of the most ground-breaking Christmas budget ideas to maintain this tradition within your means. Save that sweater with stains or holes you were planning on throwing away, and customize it to be your ugly sweater of the year. Who said ugly Christmas sweaters had to be bought at the store, anyway? 

Christmas Dress – Umm, you can dress up as much as you want for Christmas dinner. But you most certainly don’t have to buy a new dress every year. There’s nothing wrong with repeating outfits, but you can always ask your girlfriends to lend you one, or exchange your old ones for something new and different at a second-hand shop. 

Matching tree decorations with tableware, gift wrappings, and centerpieces – You take Christmas seriously, don’t you? If that’s a non-negotiable for you, and you want to enjoy Christmas on a budget…well, you’ll have to repeat decorations year after year. 

Having a Hallmark movie budget – Feel-good? For sure. Entertaining? Nothing more. But completely unnecessary for your Christmas to be meaningful and filled with joy, so just let it go. You can always watch the holiday movies later in the year, and possibly for much less. 

If anything, subscribe to their streaming device and watch your quota of movies during the free trial. Remember to cancel the subscription before you’re charged, though – the average Christmas budget has no space for Hallmark. 

Start your own traditions with your friends or your family – they will become all the more special, and they won’t necessarily require you to spend a dime!

Start Saving Money in Advance

Planning for a low-budget Christmas requires a little more than allocating money to presents and shopping ahead of time, and that’s actually saving money. 

Once you know how much you’re likely to spend this year, figure out how much money you actually have right now for the Christmas season, and plan how you’ll get the rest

Yes, all the planning you’ll be doing will get you far this year, but regardless of how strict your budget is, you’ll be having way more expenses than on an average month, so setting some extra money aside for it wil be very beneficial. 

If you’re already used to budgeting, you’ll probably be familiar with having an emergency fund, or a vacation fund. Well, it’s time for that Christmas fund to be created! This is one of the most important Christmas on a budget ideas you’ll get. 

But where would that extra money come from? 

Will you be allocating your holiday bonuses to your shopping? Working extra hours? Cancelling your gym membership for a couple of months? 

Setting your Christmas fund early in the year, and contributing to it consistently, will make it much easier to grow without setting you back all that much! 

Now that you know how much the Christmas season will cost you, and where you’ll get the money to afford it, you’re probably much more at ease about the incoming holidays. 

Ideally, though, you should aim to spend what you already have in hand, and avoid using credit or indebting yourself – you want to start the New Year with a clean slate, and not lamenting one of the merriest times of the year! 

Christmas Budget FAQ

How much money should I set aside for Christmas?

There’s no specific number you should set aside, because this entirely depends on your own financial situation. Set aside an amount that will enable you to achieve your Christmas goals, without going over the budget you created for it – read the full post to discover how!

What is the average amount spent per person for Christmas?

In the US, the average amount spent for Christmas is over $800 per person. 

How can I get low cost Christmas gifts?

First of all, set your Christmas gift budget in the beginning. How much can you afford to spend? Then, make sure you go shopping well in advance (certainly before October to get better prices), or consider doing your own presents, instead of purchasing them at the store. 

How to budget for the holidays?

If you’re planning Christmas on a tight budget, you’ll need to get clear on your priorities. Write a comprehensive list of all the gifts, ornaments, and food items you’ll need to buy, and allocate each of them the amount you can afford to spend. 
Christmas budgeting tips also include letting go of non-indispensable holiday traditions, taking inventory of what you already have to avoid unnecessary spending, and shopping in advance. 

What should be my Christmas budget per child?

According to surveys, the average spending per child last Christmas was around $270. Your 3-year-old has no idea what money means, and certainly doesn’t need you spending so much on toys and trinkets. You can make your children a priority on your budget, but allocate for each of them only what you can afford, regardless of the amount! 

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