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How to create a Christmas budget to avoid holiday debt

If you are wondering how in the world you will ever be able to afford Christmas gifts, then the first thing you need to do is create a Christmas budget. Keep reading to learn how to avoid holiday debt.


The holiday season is approaching fast, and to many people, that means getting into Christmas debt.

Nobody wants to get into debt during the holidays, yet many Americans rack up over $1000 of debt this time of year.

But, we all want to give our loved ones a magical Christmas. The key to being able to do this without falling into holiday debt is by creating a Christmas budget.

A Christmas budget is how you are going to afford Christmas gifts, not to mention all the other holiday expenses that always seem to pop up, without spending months or even years trying to get out of debt.

Whether Christmas is just around the corner or months away, I’ve got some awesome tips to get through this stressful time of year without going broke. Let’s dive in!!


How to Create a Christmas Budget

Creating a Christmas budget

Make a List (and check it twice)

The first thing you will need to do when creating a Christmas budget is to figure out what it’s going to cost.

Of course, your Christmas expense list should include gifts for your loved ones. But, there are a lot more holiday expenses that come with the season.

Many of these we never really think about until it’s too late to save for. This causes a lot of holiday stress and many of us end up spending more than we intend.

To control your Christmas spending, you must know how much money you are dealing with.

Make a Christmas gift list that fits your budget

Create a list of everybody you want to buy gifts for. Don’t forget all the little gifts that you give as well.

You might give small gifts to your neighbors, mail person, and co-workers. You also might need to include gifts for your children’s friends as well, so don’t forget to add those to your list.

Once you’ve thought of everybody you’ll be buying gifts for, you’ll need to set spending limits for each person to get the total amount of gift-giving expenses to budget.

Other Christmas budget expenses to consider

We typically only focus on affording to buy Christmas gifts for our loved ones. That makes sense since Christmas gift giving is typically is our biggest expense.

As we both know, there are many more expenses that come with the Holiday season. You’ll need to make a list of every expense that you see coming your way along with an estimate of how much it’s going to cost you.

Here are some typical holiday costs to get your juices flowing…

  • Holiday travel
  • A big Christmas dinner if you are hosting
  • Holiday decorations
  • School party treats & secret Santa gifts
  • Wrapping paper, ribbon, and bows
  • Christmas cards and postage
  • Spirits
  • Baked goods

Balancing your Christmas budget

Now that you know how much the holidays are going to cost, you’ll need to set up a Christmas fund.

First of all, figure out how much time do you have before Christmas. This will determine how much money you’ll need to set aside every week to stay on your Christmas budget.

If you already have some money set aside in a Christmas club or savings account, subtract that amount from your total expenses to determine how much more you’ll need to come up with.

Let’s say Christmas is two months away. Take the total amount of all your expenses and divide that number by 8 weeks.

Is this number doable? Make sure you can realistically put aside this amount of money. If not you’ll need to cut back on some items on your list.

Create a Christmas budget fund

If you are able to come up with enough cash to cover everything, great! Now you just need to make sure you stick with your list and not go overboard while Christmas shopping.

If your expenses are more than you can afford, you are going to need to tweak your Christmas budget.

You’ll either need to find money to pay for the holidays by cutting back on expenses or by earning money on the side to pay for it all.

Maybe you can sell some stuff that you don’t use or need to make up the difference. How about taking on a side hustle for a while?

There are many ways you can make money in your spare time to come up with extra cash in a short time.

You can also find ways to save money on your day to day expenses. You can cut out unnecessary expenses, you can meal plan to save money on groceries, or you can find cheaper alternatives to things you spend money on every month.

Lastly, if you are not able to come up with enough cash to pay for everything, you are going to need to cut back on some holiday expenses.

Maybe you can trim the budgeted amount for each person’s gift by a little bit. How about simply cutting out some of the expenses that aren’t truly necessary.

Saving money on Christmas Gifts

There are many holiday savings hacks that you can implement to cut back on Christmas gift spending. It all starts with making a plan.  

Maybe you can trim the budgeted amount for each person’s gift by a little bit. How about simply cutting out some of the expenses that aren’t truly necessary or find ways to cut back.

Grab your Christmas Budget Binder to organize everything for the holiday season.

Christmas Budget Planner


1. Determine what gifts to give

Now just because you set a spending limit for each person on your gift list, doesn’t mean that you need to spend the full amount.

By knowing what you want to give each person on your list you’ll be able to come up with a plan to give what you want while cutting back on the amount spent.

2. Shop for deals

The earlier you start shopping for gifts, the easier it’ll be to save money. Holiday sales typically start running at the beginning of November (sometimes earlier).

Black Friday and Cyber Monday are two of the biggest days to find great deals on Christmas gifts, but there are plenty of good deals in the weeks leading up to Christmas.

3. Shop online

The madness in stores during the holidays can be really overwhelming. With all the long lines and crowded stores, you might just be tempted to grab whatever you find just to get away from it all.

If you shop online, you don’t have to deal with all of that and you can take your time to get the right gift while looking for the best deals at the same time.

4. Get cash back for shopping

One of the easiest ways to save even more money on Christmas gifts and other expenses is by getting cash back.

The best way to earn cashback is by using apps like Ebates when shopping online. You can save anywhere from 5 – 40% off your purchases by doing this. It’s worth the little bit of time spent to use this.

Check out The Hassle-Free Way to Save Money Christmas Shopping to learn how to save money shopping online.

5. DIY Christmas Gifts

DIY Christmas gifts are a great way to save money. Just because a gift isn’t store bought, doesn’t mean that it’s less valuable.

In fact, DIY gifts are usually some of the best gifts that you can give. It shows that you put thought into personalizing the gift.

Gift baskets make a great gift idea for just about anybody. Just fill a basket with some inexpensive items using a theme.

I’m sure that you have many coffee lovers on your list. You could fill a basket with different coffee flavors, add in some drizzles, and a few nice mugs.

You can even throw in some laminated recipe cards of Starbucks copycat recipes. Now you’ve got yourself a great gift idea that’s inexpensive and thoughtful.

6. Shop alone

If you decide to brave the department stores during the holiday season, it’s best if you go Christmas shopping alone.

It’s almost impossible to shop when you have your children in toe. The fewer distractions that you have, the easier it is to focus on finding good deals.

7. Combine gifts

Combining gifts for couples, siblings or even families is a good way to save money while still affording to buy for everyone.

Your spending limit will increase but you can typically save more money when getting one group gift for multiple people on your list.

8. Wrap more gifts

People just love unwrapping gifts, especially children. You can make your Christmas budget go a lot further by wrapping more gifts separately than combining like items in the same gift box.

Say you want to give your Mom a nice jewelry set as a gift. You can wrap each piece separately to create the illusion of giving more while staying on budget.

Just the fact that you are giving more gifts will ease the feeling that you are not giving enough.

9. Give the gift of time

Time is a precious commodity that everyone seems to be lacking. If you can’t afford to buy stuff, why not give the gift of time.

I’m sure a family member would love to get a night out without having to worry about paying for a babysitter to take care of their kids.

How about offering to detail your brother’s precious truck for him. You know he’d love that. You can even give the gift of running errands for your parents who don’t like to leave the house much in the wintertime.

All these things are gifts that anyone would love to get and they won’t cost you a dime. You can even make a gift certificate to place under the tree.

Remember, Christmas is about celebration and being with the ones you love. Giving gifts is great, but it’s not really what Christmas is about.

If you can’t afford to give gifts to everyone, that’s ok. If you have to cut back then do it so you stay out of holiday debt.

Christmas Budget Planning

Choose a method to create and track your Christmas budget. You can do this in many ways. You can create a simple spreadsheet, use an app, or a simple pen and paper.

It really doesn’t matter which method you choose as long as you find a way to stay on budget during the holidays.

This Christmas budget planner is how I am able to stay on top of my Christmas budget every year.

It has so many helpful worksheets to stay on top of everything during the holiday season when things seem to be really hectic.

Stick to Your Christmas Budget

Once you’ve balanced your Christmas budget, you must stick to your plan. I know that it can be really tempting to buy stuff that you hadn’t intended while Christmas shopping.

In fact, stores make it extremely difficult with their marketing tactics. Make sure you bring a list with you when you go shopping and stick to it.

If you are an impulse spender, take only enough cash for the things you intend to buy and leave your cards at home.

Look for deals while shopping to cut back on expenses, review store circulars to find the best place to buy specific items, use extensions to help save money while shopping online.

Save money on food expenses with coupons, and money saving apps. There are tons of coupons that will help save money when hosting holiday dinner and even wrapping supplies.

A lot of these coupons are also available on shopping apps such as Ibotta and Checkout 51. You just need to take the time to look at what’s available to save money.

There are many ways to cut back on spending by putting a little bit of effort into it, making smart buying decisions and finding cheaper alternatives.

Start Saving for Christmas Earlier

All the tips listed above are great ways to afford Christmas. But there is nothing that takes the stress out of the holiday season than starting to prepare for it sooner rather than later.

Starting a Christmas savings plan is one of the easiest ways to avoid the financial hardship of the holiday season.

It may be too late for this year, but going forward start putting some money aside every week or month. This way you have all year to save for the holiday.

Open a high interest yielding savings account and contribute a small amount to it on a regular basis throughout the year.

I keep mine in a CIT Bank account for the simple reason that it pays way more than most savings accounts. Why not earn some free money with your savings?

Christmas Budget Conclusion

Staying on top of your expenses during the holiday season is imperative to not get into Christmas debt.

I know it can be tempting to overspend because you want to give the people you love special gifts and make the season magical.

You must also think of how debt will affect you once the holidays are over. After all, there are another 364 days in the year.

Grab a copy of this Christmas Budget Planner to stay on top of your holiday budget.

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