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Budget For Christmas

The holiday season often derails budgets with the increase in spending on gifts, decor, food, travel and more. With some planning and restraint, you can avoid going into debt this Christmas by creating a thorough holiday budget. Follow these tips to budget for all your Christmas expenses.

Assortment of wrapped Christmas presents

Calculate Your Total Holiday Spending 

The first step is taking a realistic look at what you plan to spend for the holidays across all categories.

 Make a Gift List 

Tally up all the people you plan to buy gifts for and estimate what you’ll spend on each. Factor in immediate family, extended family, friends, coworkers, teachers, etc. Set limits like $50 per family member.

 Estimate Costs for Other Items

  • Decorations: trees, lights, ornaments, etc.
  • Ingredients for holiday meals and baked goods
  • Travel costs if applicable 
  • Holiday attire and accessories
  • Holiday entertainment  
  • Holiday home items like candles and baking supplies
  • Holiday tips for service providers
  • Charitable donations 

Total It Up

Add together the expected costs for each category above. This becomes your total holiday spending estimate.

Twenty dollar bill on table with box of ornaments to show to budget for Christmas

Set a Limit for Holiday Spending

As a general rule, holiday expenses should not exceed 1.5% of your annual income. If the total exceeds what you can afford, look for ways to cut costs.

Adjust Expectations if Needed

You may need to adjust holiday gift expectations, travel plans or other spending if costs are ballooning beyond your means. Be realistic.

Strategize Where to Trim Costs

To align your total expected costs with your budget, identify areas to scale back spending.

Couple looking in window of bakery decorated for Christmas

Ways to Cut Costs Without Sacrificing Joy

  • Buy Fewer Gifts- Set limits on gifts or suggest a Secret Santa gift exchange with family to reduce the number of presents needed.
  • Baking Your Holiday Treats- Instead of buying expensive store-bought treats, bake your own cookies, cakes, and other holiday delights.
  • Crafting Homemade Decorations- Get creative and make your own holiday decorations. Gather materials like paper, ribbons, and old ornaments to create unique and festive decor.
  • Utilize Sales and Coupons- Check ads for holiday sales, promo codes and cash-back opportunities when shopping all season long. Sign up for rewards programs.
  • Cut Back on Holiday Meals- Reduce expensive meat-based dishes in favor of cheaper sides. Bake desserts from scratch rather than purchasing. 
  • Scale Down Travel Plans- Opt for a cheaper destination, shorter trip, or staying with family to reduce travel costs this year.
  • Save Money Throughout the Year- Implement savings strategies so you’re financially prepared for the holidays.
  • Open a Holiday Savings Account- Save a little from each paycheck into an account specifically for holiday spending. Make it a habit all year.
  • Stick to a Holiday Budget- Track spending diligently and avoid going over your set holiday budget. Cut optional purchases if needed.
Couple walking in the street talking while holding bag of wrapping paper.

Budgeting for Christmas doesn’t mean you have to sacrifice the joy and spirit of the season. With careful planning, creativity, and thoughtfulness, you can have a wonderful Christmas while staying within your financial means. Stick to your budget, prioritize what truly matters, and embrace the joy of giving and sharing this magical season with your loved ones. With some diligence, you can enjoy the Christmas season without breaking the bank!

Christmas tree with gold lights against a dark blue wall with presents underneath.


  1. The hardest part of the holiday season is the budget. My family keeps growing every year. I start my shopping in September and I ask my family for their list at this time every year. They all know I start this early so they mostly cooperate. I actually have all my shopping done for this year except for the couple of people who always seem to wait until the last minute. Then all I have to get are the stocking stuffers, which always seem to be the hardest things to buy as they get older. This way I get to sit back and just enjoy the season. Thank you for the great ideas. I love this site. It has been so interesting, helpful, and fun to read.

    1. Congratulations on finishing your shopping! That is impressive. I agree with you that the hardest part of the holiday season is the budget. It is hard because you obviously care about your family and want to shower them with gifts. Your wallet will thank you for the budget come January. 🙂

  2. I needed this as a reminder! Also, the part about making your decorations brought me back to my childhood where we made clay ornaments and decorated the tree with strung popcorn and cranberries. We didn’t have a ton of money but it was festive non the less.

    1. Homemade decorations are the best! The fact that you were able to return to your childhood with thoughts of clay ornaments and strung popcorn demonstrates that they were more than just decorations. They are part of memorable holiday moments that stay with you always. That’s what Christmas is all about.

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