How To Make A Christmas Budget And Stick To It

Christmas is the season of giving, and while spreading holiday cheer can warm your heart, you don’t want it to empty your wallet. The Deloitte 2019 Holiday Retail report says that the majority of Canadian shoppers spend an average of $1,706 on gifts, travel, food, and alcohol over the holidays.

That’s a big number for most budgets!

And, whether your holiday spending goals are more or less than the average…you don’t want to start the new year with crushing debt.

The best strategy to avoid this is to make, and stick to, a holiday budget. This article will help you set-up your Christmas budget, prioritize your list of expenses, keep track of your holiday spending, find money-saving tips for the holidays, and not go overboard buying gifts.

With our careful planning tips, you can glide into the New Year having accumulated wonderful holiday memories, with zero holiday debt.

There are affiliate links in this post. This means if you make a purchase through one of my links I may earn a small commission, at no cost to you. Read my disclosure policy to learn more.

Creating a Holiday Budget You Can Stick To

The process of making a holiday budget is the same as creating a family budget, just on a smaller scale.

Begin by figuring out how much you have to spend, then divide up that money among all the items you need to buy. If the amount of money you have to work with doesn’t cover your costs, then you’ll need to make some cost-cutting decisions. We’ll go over tips on how to do this later on.

But first, get started by following these 6 steps to set-up a Christmas budget – and begin the holidays knowing exactly how much you can afford to spend for every item on your list.

1. Set A Christmas Shopping Spending Limit

The first step when setting up your budget is to decide how much you can afford to spend. Ideally you already have the cash set aside for all your holiday expenses in a designated savings account.

If you start planning early, saving money for big events, like Christmas, is possible even if you are working with a low income. The idea is to already have a tidy sum saved-up by the time you start writing your gift list.

If you are starting from scratch on your holiday savings, you’ll need to draw upon other sources of money. One option is to use any money in your bank account that isn’t meant for other expenses.

Another option is to go into savings-overdrive in the time you have between now and December. Consider how much you can realistically cut out of your household budget each week before Rudolph arrives.

Add it all up to calculate the total amount you have to spend on Christmas, Hanukkah, Kwanzaa, and other celebrations.

Check out our Ultimate Family Budget Planner – Easy to use, printable PDF worksheets to guide you through creating a budget.

2. Make A List Of Expenses…And Check It Twice!

Once you know how much you have to spend, the next step is to make a list of everything you need to buy. Separate your shopping list into the following categories based upon your needs:

Holiday Shopping Categories:

• Gifts – List all the people you intend to give presents to this year. Start with the people closest to you, like family and friends. Don’t forget to include stocking stuffers, which can add-up quickly. Then add the smaller gifts you need to get for coworkers, teachers, social events, and Secret Santa exchanges. If there is money available, make room in your budget for a few extra generic gifts (bottle of wine, gift cards) in case someone surprises you with a present and they weren’t on your list.
• Wrapping Paper and Gift Bags – If you’ll be wrapping most of your gifts, budget for gift wrap, gift bags, bows, and gift tags. Keep your wrapping costs down by reusing gift bags and bows each holiday season. Wrap as many gifts as possible for your immediate family in bags – then collect and store them away for next Christmas.
• Cards and Postage – If you send out holiday cards, or are sending gifts in the mail, include a line in your budget for this expense as well as the price of stamps.
• Food & Drink – Make a list of the groceries you will need for your family dinner and any holiday parties you are hosting or attending. A fun way to save money on Christmas gifts is by making baked goods as presents – just remember to add the cost of ingredients under this category.
• Decorations – Holiday decorations include items such as a Christmas tree, lights you need to replace, and Hanukkah or Kwanzaa candles.
• Travel Expenses. If you’re visiting relatives for the holidays, or just getting out of town, travel costs are another expense you need to budget for. This category can include gas, airline tickets, baggage fees, parking at the airport, hotels, meals, and travel insurance. And if you have pets, you will need to budget for their care while you are away.

Don’t dive headfirst into the spiked eggnog if you can’t afford to buy everything on your list. It just means you have to check it twice and set some priorities.

Go through your list and number the items based upon how important they are to your family. Give the highest priority items, like gifts for your kids, the number 1 spot and then go down from there. The top items should get first dibs when you start divvying up money for your budget.

3. Create Your Holiday Budget

Now it’s time for the fun part… allocating money. Go through your list and estimate how much money you can realistically spend on each item.

Try and be honest with yourself about what you can manage to do with your budget. You very well may need to make some tough choices.

For example, in addition to my 4 lovely daughters, there are also 8 nieces and nephews to buy for in my family. Rather than shop for 12 kids, my siblings and I do a Secret Santa gift exchange among the children. And the adults don’t buy gifts for each other. This option saves us a lot of money and our kids enjoy the “secret” aspect of this tradition.

Take a look at your spending from last year to get a realistic idea of how much each category might cost you.

5. Adjust the Numbers

When you add up all the amounts you’ve budgeted for each item, it’s quite possible the total will exceed the spending limit you set for yourself in step 1. If that is case, you are going to have to adjust some numbers to balance your Christmas budget.

Start by making cuts to your lowest priority purchases.

Let’s say you are over by $150. Reviewing your holiday budget, you see you’ve planned to spend $50 on presents for your children’s teachers and another $200 on food & drinks for a family dinner.

To trim those costs, you could instead purchase craft supplies for $25 and have your kids make friendship bracelets for their teachers. Change your big family meal into a potluck and save yourself another $125. That will free up the $150 in funds you need to balance your budget.

If you’ve been as aggressive with trimming your budget as Clark Griswald is with trimming his Christmas tree, try thinking of ways to increase your spending limit.

Festive Tips to Make Extra Money for Christmas:

• Sell Stuff – You can give your holiday savings a boost by selling off some gently used stuff. Items such as baby gear, tools, clothes, collectibles, electronics, jewelry, and small kitchen appliances can fetch a good price on Kijiji or Craigslist.
• Start a Side Hustle – Another way to raise extra cash is to start a seasonal side business. If you live in a wintry climate, offer out your snow shoveling services for a price. If you are a baker, advertise to help out busy parents with their holiday cookie baking.
• Take a Holiday Job – During the holiday season, there’s an extra demand for short-term salespeople, coffee-shop baristas, and delivery people. You could even join Santa’s crew as one of his elves taking pictures of kids at the mall.

6. Keep Track Of Your Spending

A key part of Christmas shopping on a budget is to keep a running record of how much you’ve spent. As you shop, write down how much you’ve spent in each category and how much money you still have left,

Using a bank account specifically for holiday spending will prevent you from going over budget. Deposit your funds into this account and only make withdrawals for holiday gifts and expenses. With online banking, you can quickly check your balance at any time – giving you something productive to do while waiting in those long, Christmas cashier lines.

If you prefer a more hands-on approach, use a jar or envelope system. Set-up a labelled jar or envelope for each category of spending. For example, one for gifts, one for decorations, and so on.

Fill each one with the designated amount of money you budgeted for. Either bring your envelopes with you when you shop or pull the money out when you get home.

Being able to physically see how much cash you have left in each category will help you reign-in the sleigh on your spending.

Related Article: How To Stick To A Budget – 12 Doable Tips

How to Celebrate Christmas on a Budget

Making a holiday budget is fairly straightforward, but sticking to it is not. When your Christmas gift list is almost as long as Santa’s, it can seem impossible to keep within your spending limit.

In order to celebrate Christmas on a budget and avoid holiday debt, you need to stretch your dollars. With a few changes to the way you plan for, shop, and celebrate this holiday season, you can trim your spending WHILE trimming the tree.

1. Embrace The True Spirit Of The Season

Like all those annual holiday TV shows teach, the true spirit of Christmas has nothing to do with spending money. A great way to save on holiday gifts is to scale down on your families expectations about how many boxes need to be under the tree Christmas morning.

Have a pre-holiday chat with everyone you normally exchange presents with and explain you are on a tight budget this year. Pitch the idea of giving fewer, or less expensive, gifts than you did last season.

No need to feel uncomfortable talking finances with your family and friends – I guarantee many of them will be relieved and on-board with your idea to reduce gift-giving costs.

Meaningful Ways to Save Money on Christmas Gifts:

• Give Homemade Crafts or Cookies – For the neighbours, co-workers, friends, and teachers on your list you could give them homemade treats or crafts instead of buying presents. One fun option we’ve done in my family is to make holiday centerpieces using evergreen cuttings and Christmas decorations from the dollar store. Basically any skill you have, be it knitting or woodworking, can be used to make homemade gifts.
• Have a Secret Santa Gift Exchange – This is a good alternative for big families with lots of kids. Put all your names into a hat and have each person draw one. Maybe do a separate exchange with just the kids. Then, instead of shopping for many of gifts, each person can devote their thought and money to just one person.
• Go In On An Experience Together Instead Of Gifts – Instead of spending money on gifts for each other, pool all your funds and put them towards a family vacation, a big New Year’s dinner, or tickets to a show.
• Set A Maximum Cost Per Gift – Set a price limit per person and keep all your gifts for each other below that dollar amount.
• Buy For A Family In Need – Want to demonstrate the true spirit of Christmas to your kids? Instead of buying dozens of presents for each other, sponsor a needy family through your local church or community group. Your children will really enjoy picking out meaningful gifts for another family, and you’ll be so proud of them for putting others’s needs ahead of their own.

Related Article: How To Save Money On A Low Income

2. Shop With A Strategy

Planning ahead and shopping smart can make your Christmas budget stretch further. Here are some ideas to get the most for your money:

6 Great Ways To Save Money Christmas Shopping

Shop Early	By spreading your holiday shopping throughout the year you can find the best price on gifts that your loved ones will really love. You also reduce the chance of overspending at the last minute just to “get something quickly and get out of the mall!”
Shop Online	There are many advantages to doing your holiday shopping online, especially during a pandemic! There is the convenience, the ability to compare prices, and the relaxed atmosphere of your living room. Just make sure you shop through Rakuten to get free cash back when buying from the sites you normally shop (Amazon).
Shop Secondhand	Many gifts such as classic books, records, collectibles, and vintage jewelry are cheaper when purchased secondhand. Shopping used is also an eco-friendly gift option and allows you to find unique and rare presents.
Pay with Cash	Consider using cash for all your in-store purchases. With a limited amount of bills in your wallet, it’s impossible to overspend.
Use a Rewards Card	If you aren’t carrying cash or debit cards when you shop, make sure you use a cash-back credit card or rewards credit card. Just make certain you don’t charge more on any purchase than you have budgeted for.
Stick to Your List	No matter how enticing the sales are, don’t make any unplanned purchases or you’ll plow through your budget in no time. Once you’ve checked off the items on your list, it’s time to quit.

4. Everyone Pitches In For Potluck

Hosting a big holiday dinner party costs big money and adds a lot of work to your already busy life. A popular solution is to make your Christmas gathering a potluck.

Ask everyone to bring one dish that will feed the number of guests you are planning to have over. Assign each guest a particular type of dish you’d like them to make – for example, have 1/4 of your guests bring main dishes, 1/4 appetizers, 1/4 side dishes, and the last 1/4 can bring a dessert or bottle of wine.

Don’t feel badly about asking your friends and family to share the cooking duties. People are pretty used to the idea of a potluck and will be happy to contribute and help celebrate with you.

5. Focus On Family Traditions

For most of us, it’s the special holiday traditions you share with loved ones that are remembered for years to come – and not the gifts. Here are some inexpensive holiday activities that will create lasting memories:

• Taking a walk or drive to look at Christmas lights
• Watching a Christmas movie as a family such as White Christmas, Christmas Vacation, or Elf.
• Sledding and then warming-up with a cup of hot chocolate
• Visiting Santa at the mall or in a parade
• Making homemade decorations such as wreaths or centerpieces
• Decorating the tree together
• Baking gingerbread cookies
• Reading “Twas the Night Before Christmas” on Christmas Eve
• Caroling
• Lighting Hanukkah candles
• Assembling a puzzle together
• Helping elderly neighbours shovel their driveways

---

How To Make A Christmas Budget Conclusion

After the last of the gifts are unwrapped and the decorations are taken down, evaluate your budget to see how well you did sticking to your spending limit. Perhaps you were on target for each category. If so, well done you!

If you went over budget, then use this information to help you plan accurately for next year. After all, you now have 12 months to prepare and start stuffing a stockings worth of cash into next year’s holiday savings account.

Other Popular Posts:

How To Stick To A Budget – 12 Doable Tips

How To Budget For A New Baby – First Year Checklist

Smart Ways To Save Money On Back To School Expenses