Christmas is supposed to be a joyful time of year spent with the ones you love. But for a lot of people, Christmas is filled with pressure, debt, and questionable financial decisions.
I know what it’s like to fall into that second category. Before I started budgeting, I tried to wing it when it came to Christmas presents and extra holiday spending. I had no plan, didn’t save money in advance, and I ended every year deeper in debt with a sick feeling in my stomach.
But that’s not the end of my story, and it doesn’t have to be yours.
As I began to take control of my finances through budgeting, I found that I could still shower family and friends with a little extra joy at Christmas. The difference was this. I didn’t have to charge those Christmas gifts on my credit cards. I didn’t have to take on debt with no real plan for how to repay it. I didn’t need to end the holiday season, feeling frustrated and overwhelmed.
Below, I’m going to share some of my favorite tips to help you plan for a debt-free Christmas this year, including:
- How to Make a Christmas Gift Budget (with Free Printables)
- How to Christmas Shop on a Budget
- Ideas to Use When You Can’t Afford Christmas Presents
How to Make a Christmas Gift Budget
The first step to planning for a debt-free Christmas is to, well, have a plan. A Christmas budget helps you avoid overspending and credit card debt. After I started my budgeting journey, my goal was to have enough cash on hand at Christmas, so I wouldn’t be tempted to fall into old patterns.
Save as Early as Possible
Rocking your Christmas gift budget starts early. You want to tuck away enough cash to cover those extra holiday expenses without turning to your credit cards. It’s best to begin this process as early in the year as possible.
The amount you save will be the foundation for the Christmas budget you’re going to create. Let’s say you start in January and tuck away $75 per month out of your paychecks. By November, you would have saved $825 for your Christmas budget.
If you haven’t started saving yet, don’t panic. There’s still time. Maybe you can afford to save $150 each month in October and November. While a $300 Christmas budget might be tighter than you’re used to, it’s still enough to do something special for your loved ones — and that’s really the point, not how much you spend.
Write It Down
Once you’ve created your Christmas shopping fund (however big or small it may be), you’ll know how much you can afford to spend on extra holiday expenses. This is the figure you should write at the top of your Christmas Planning Worksheets for your total budget amount.
Visit the FREE Resource Library to download your Christmas Planning Worksheets.
On your worksheets, fill in the different areas where you expect to spend money this Christmas. Keep in mind; extra holiday expenses can include more than just gifts. You may also need to prepare your budget for:
- Holiday Meals and Treats
- Christmas Cards (Printing and Postage)
- Gift Wrapping Supplies
- Holiday Travel
- Christmas Décor
- Charitable Donations
Finally, you can fill out your Christmas Gift Budget Worksheet. Take your starting budget, subtract any planned expenses from the spending categories above, and see how much money you have left for gifts.
After you write down the names of people you want to purchase a gift for this Christmas, you can divvy up your remaining budget to figure out how much you can afford to spend per person. To make this process easier, some people assign a percentage of their gift budget to each person on their list. It might look something like this:
- Child: 25%
- Partner: 25%
- Parents: 30% (15% each)
- Friends: 20% (5% each)
If you followed the example above, with $400 left in your budget for gift giving you could spend up to these amounts:
- Child: $100
- Partner: $100
- Parents: $120 ($60 each)
- Friends: $80 ($20 each)
You can also use some of the tips below to stretch your gift budget. This might help you to spend less than you planned on gifts and add extra padding to your Christmas budget for unexpected expenses. (They always happen.)
How to Christmas Shop on a Budget
Here are five easy tips to help you Christmas shop on a budget.
- Leave your credit card at home and shop with cash.
- Don’t give in to the temptation to buy for yourself.
- Stick to your shopping list.
- Search for coupons and discounts in advance.
- Use Honey to find deals when shopping online.
- Use apps like Ibotta, Ebates/Rakuten, and Mr. Rebates to earn cash back every time you shop online.
You can also check out my story on how to lower your child’s Christmas present expectations.
Ideas When You Can’t Afford Christmas Presents
Sometimes there simply isn’t enough extra money in your budget to afford Christmas presents. Still, the last thing you want to do is add more debt to your credit cards. That will only stress your budget and set you up for bigger financial problems down the road.
Here are a few ideas that may help if you can’t afford Christmas presents.
- Consider a side hustle. Here are more than 20+ ways you can make extra money.
- Cut spending. Take an honest look at your spending. Maybe you could give up cable, eat out less, reduce your grocery budget, or find other ways to free up extra cash and save more money.
- Cash in credit card rewards. If you have rewards credit cards, check to see if you’ve earned enough points to cash in for products or gift cards you can give as gifts.
- Make DIY gifts. Pinterest is full of ideas on how to make meaningful, inexpensive Christmas gifts. You can bake cookies, make handmade ornaments, and Christmas décor on a budget, and find dozens of different ways to show your love without going into debt. (That’s the last thing a true friend would want for you anyway.)
- Give your time. Christmas gifts don’t have to be objects. You can give your time to the people you love. Consider making gift certificates for a night of free childcare, pet sitting, or anything that might appeal to your loved one. A future game night at your place with homemade treats can be a hit with younger family members. You could even volunteer at a charity in your loved one’s honor and let them know.
If you opt to give homemade gifts or gift certificates, you can also spend a little extra time on the wrapping and presentation for an added touch of Christmas cheer. Check out the Dollar Tree for great values on supplies that you can use to create memorable Christmas gifts on a budget.
Thank you for the ideas! Here’s something that has worked well with my two kids: Instead of my extended family guessing as to what to buy my children for Christmas/birthdays and ending up with a bunch of stuff they don’t need, I give them ideas. I kindly ask if they know what they want to buy and if they don’t then I’ll give them a specific item to buy or I’ll tell them a few gift suggestions so they purchase something that my children really want or need. I just make sure that the item fits within the budget that they allot for Christmas or birthdays. This has really helped my personal budget because it doesn’t have to come out of my pocket. My family always appreciates the suggestions and they love how my children’s faces light up when they receive a gift that they really wanted.
Great information Miko! I am looking for printables for fall themed envelopes. Where would I find them? The envelopes I have been using are wearing down, and I think I’d like to try vertical envelopes too!
Thank you for sharing this budget journey with me. My fiance and I are saving for a trip to Europe in spring 2021. I am feeling better about my finances, thanks to you.
Hi, I am not sure if I am accessing the site correctly, I am trying to go to the Christmas printable but it keeps having me access the library, so when I click on the library I have to keep logging in??? Is there way to search printables?
Hi! Do you save this in a savings account or in an envelope?
Thanks! Great tips and I love your blog.