Taking the steps to create a realistic Christmas budget will stop you from overspending and keep you on track for a debt free Christmas.
Creating a realistic budget for Christmas can be done in 5 simple steps including making lists of the people you want to buy for and all of the additional items you need for the holiday. Collecting a pool of cash from where you purchase and assigning a dollar amount to each. And finally, not spending any more once you’re done.
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Why Do You Need a Realistic Christmas Budget?
Just like a household budget, a Christmas budget is a plan for your money. It allows you to plan ahead for your personal finances and ensures you will have enough for what you need.
According to CNBC, 74% of Americans said they failed to financially plan for Christmas.
The worst idea is to put the holidays on a credit card and then have to pay it off for the rest of the year. The interest alone that you’re paying is enough to get a good jump on next year if you were putting the same amount in a savings account.
You need a budget to stay ahead of the game. Christmas is such a stressful time of year. Why would you want to add to that?
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5 Steps to Create a Realistic Christmas Budget.
- List all of the people you want to buy for.
- List all other areas that you wish to spend money on.
- Evaluate how much money you have right now to spend.
- Assign a dollar amount to each.
- Decide, based on the amount of money you have, if the list needs to be shortened, the amounts need to be decreased, or money needs to be earned.
1. Make a list of people you want to buy for.
Christmas presents includes all extended family, immediate family, friends and people you might normally forget about (see below). List them as if there were no financial barriers. Everyone that you could possibly think of.
2. List all other areas that you want to spend money on.
All the other areas to be included. Don’t forget to include travel, clothes, food, and decor.
3. Evaluate how much money you have right now.
If you have been saving all year, you’re aware of how much you have. If you haven’t, then take a look at your finances and see what you have in cash (without credit cards).
4. Assign a dollar amount to each category.
Assign a dollar amount to each person and each category based on what you think is fair and appropriate.
5. Decide if the list needs to be edited.
When you add up all of the amounts assigned it may or may not match up to the allocated funds. If you don’t have enough money, you have a few choices.
Cut back on expenditures, reduce amounts assigned, or find more money. Again, I strongly encourage you to avoid credit cards at all costs and only buy what you can afford to spend. Stick to what you planned to spend.
13 Things You’re Forgetting in Your Christmas Budget
Christmas Cards. Order early (or better yet, last year during after Christmas clearance sales)
Postage and shipping. I order my stamps online as soon as they’re available. Also, if you plan to send packages, don’t forget shipping costs.
Decorations. You may not need a lot of new decorations if you have been doing this long enough but consider things that fade, fall apart, or break. Christmas lights need to be replaced. Wreaths and outside decor will fade and weather through the winters. Other items just break.
Gifts for Teachers. Consider practical gifts for teachers.
As sweet as mugs and teacher ornaments are, things like gift cards to a grocery store, a local bakery, or Dunkin can be used for themselves or to make their holiday a little easier if they’re trying to create a realistic holiday budget.
Food. This includes all special meals: Christmas Eve, Christmas morning, brunch, lunch, dinner and all the coffee and snacks.
Baking Supplies. Grab them all when they go on sale. Also, consider stocking up for months to come. Nuts, butter, and flour freeze well.
Gifts for Co-workers. Clearly, this is not a requirement of all work places. But if you want to give something out to co-workers, its wise to plan ahead and not wait until the last minute.
Activities. There are always so many activities planned for this time of the year. Make sure that if there are any expenses attached to these, that you’re financially ready and add them when it’s time to create your realistic Christmas budget.
Photos. This is something else that should be done ahead of time. So you can get the photos back and then include them in your photo cards.
Gifts for Service Workers. Many people like to give small gifts to their postal worker, garbage collector, bus driver, and crossing guard. Don’t forget to plan ahead for them, too.
Stocking Stuffers. I am surprised every year how much money I spend on stocking stuffers every year. Make sure you budget this in as an addition to your regular gift budget.
Gifts for Friends and Neighbors. Growing up, I remember my mama and I riding around the neighborhood giving out homemade goodies to all the neighbors each year.
It was a great memory. Times have changed a bit and I think this has become a lost tradition. But, if its something that you still partake in, add it to your list.
Holiday Clothes and Accessories. Not only the clothes for photos but clothes for parties and church, too. Don’t forget the accessories. The belts for dress pants and the warm tights for under that festive dress.
What if I Have No Money Saved for This Christmas?
On the day that I write this, you have 43 days until December 25. Let’s do a Christmas Budget Inventory! It’s always best to save ahead of time in a Christmas Sinking Fund, but if you haven’t done one before and it’s down to the wire, exploring other ideas is a high priority.
Household Budget
There is no better time than right now to come up with a household budget. A zero-based budget will break down all the things for you.
You need to know where your money is going and what your expenses are today in order to know how much you can save in these coming weeks.
After you have a budget for your home, start scaling WAY back. Skip the things that you do not NEED. Commit to a spending freeze to stockpile money. Decide to eat out of your pantry and only buy necessities like dairy and fresh produce. Dig deep to the back of that freezer.
Create Your Christmas Wish List
Let’s start with gifts for the people you love (or just like or maybe feel obligated to buy for).
Make a list and decide on a dollar amount for each.
Now, knowing how much money you can scrape together based on your budget, how can we lower this list? Can you bake for coworkers rather than spend $25 each? Could you find some good deals online with a value of $50 (for your Secret Santa family member)yet only costs you $35?
How about getting a small Christmas gift for your niece and a printout of a promised trip to the aquarium in the cold winter months? Experiences are a great gift for kids.
Consider the 5 gift rule for children. This is what we do for our niece, nephew, and granddaughter.
Prioritize Traditions and Fun
You don’t have to do all the things this year. Set priorities.
What are your top three favorite traditions that require money? Can you do those and find alternative (and free) things to do instead?
Also, consider how you can still carry out these traditions but tweak them to cost less. Remember why you love the specific tradition the best.
If your favorite part of the holiday is your annual Christmas party, why not make it 4 different appetizers instead of a buffet dinner? Or consider serving a signature punch instead of wine, beers, and mixed drinks.
There are some great cheap Christmas traditions that can be so fun for anyone – kids, adults, families, and singles.
Earn Extra Money
After you have looked at your household income, made your lists, and realized the money you have is simply not enough, it’s time to get intense and make some money fast.
- My good friend Kim sells pumpkin rolls for Thanksgiving. She buys baking supplies in bulk and sells them for $15 each. This funds Christmas and everyone loves homemade gifts when they come from the kitchen.
- Retail stores are hiring for the holidays. This can give you a few hundred dollars in a month working part time.
- There are always date nights and Christmas parties. Consider babysitting on the weekends in the evenings. Babysitters make GOOD MONEY!
- For more ideas on how to make an extra $300, check out this article.
Make What You Can
If you’re crafty, make some Christmas gifts. Custom t shirts are a great gift idea. If you have a vinyl cutting machine or know a friend who does, grabbing a $5 t-shirt from the craft store and making gramma a custom t-shirt is a sweet and cheap gift.
Bake for friends, neighbors, and co-workers. I have been doing this for years. I make these cute quick breads. Sometimes I pair it with maple butter or a sample coffee. One Christmas, I paired it with a custom Christmas CD that I made.
If you have a sewing machine, try sewing some pretty pillow cases. They are very simple, straight line stitches. And a patterned pillow case looks so nice with a solid set of sheets. Lets face it, sheet sets never come with enough pillow cases.
How to Save All Year for Christmas
I understand the thought of Christmas all year round is a downer for so many. It might be because the stress of the season has depleted the love for the season. What if you could plan ahead and take away all that stress?
Having a Holiday Planner has saved me over the years. It’s the one place where everything Christmas lives.
Create a Budget
I know it sounds like a broken record but the greatest way to learn is through repetition, right. So having a budget allows you the freedom to plan for the things that are the most important to you.
Christmas comes at the same time every year. We know its coming.
Set up a sinking fund
Plan ahead and start a mini savings account just for Christmas.
Because I use the budget by paycheck method, I save money for Christmas all year. I set aside $50 per paycheck ($100 a month) specifically for Christmas in a sinking fund.
Having an account earmarked for Christmas with a debit card attached to it is a great idea. Because so many people are shopping online, having a dedicated account and card make for simple shopping.
Start saving for next year now.
Consider using your tax return
I understand that many people get their tax returns in the spring but consider taking that money and saving it for the following Christmas.
It might be hard for some to hold on to that money for so long, so putting it in an online account where it’s out of site, out of mind is a great idea.
Sell stuff in the fall
Doing a fall declutter with the intent of making money for Christmas is another option.
Buy all year round
- Hitting the after Christmas sales for all of your gift wrap, bows, gift bags, and cards will save so much money. Most stores markdown this stuff up to 70% off – or even more.
- Earning gift cards through online apps like Ibotta or online earning and coupon sites like Rakuten and then saving them for Christmas.
- Consider picking up gifts for people all year round. Start your Christmas shopping early. Seeing something that your mama would love on clearance at Kohl’s and then writing her name on it and putting it away will help with the exhausting hustle as well as that clearance price tag.
- Picking up gift cards each week (or month) through the year. $5 Dunkin here, $25 Target there. They can be used to give as is or to spend on those gifts.
Final thoughts on how to create a realistic Christmas budget…
With all the excitement of the holiday season, it’s very easy to over extend ourselves and overspend our money. But having a realistic Christmas budgets gives you the freedom to buy everyone that you love a little something special without the guilt of not having the money.
The one key is to not go above the assigned Christmas spending plan or buying gifts you can’t afford.
The last thing you want to do is get those credit card statements in the mail come January first and wonder how you fell into such a deep hole. Start where you are.