Christmas Budget: Learn how to set up your Christmas budget in 7 simple steps. Plus 5 realistic tips to cuts costs and have a debt free holiday.
Christmas is one of the most enchanting times of the year.
It’s a cheerful holiday that many families celebrate.
Of course, the downside of Christmas is that it can be quite expensive.
Unfortunately, many people take on debt to afford the cost of Christmas gifts.
But racking up credit card debt to pay for Christmas presents only leads to temporary happiness.
Because after the holidays, you have to pay that money back with interest.
In this post, I will discuss how to set up a Christmas Budget to save money this holiday season.
Let’s dive in.
Christmas Budget: Preliminary Considerations
Before you create your Christmas budget, there are a few preliminary steps to consider.
Mainly, you must analyze your personal financial situation to know how much money you can afford to spend.
If you have a lot of debt and no savings, it’s probably wise to pay off debt rather than spend frivolously on Christmas. Stick to cards and chocolate at most.
Alternatively, if you are not prepared for retirement, you should limit your spending on Christmas gifts. Do not let your personal pride get in the way.
If you have more money than you know what to do with, perhaps you should consider early retirement or giving back to your community.
Ultimately, the choice of how much to spend on Christmas is a personal decision.
The factors to consider before setting up a Christmas budget are the following:
- Income
- Debt
- Savings
- Assets
- Your current needs
- Relationships
How to Create a Christmas Budget
Ideally, a proper Christmas budget should be set up at the beginning of each year to make saving as easy as possible. This way it’s possible to pay yourself first into a savings account to have money set aside for Christmas spending.
Admittedly, I don’t save for Christmas in advance. I save for retirement, emergencies, and real estate. Once Christmas comes around, I save less and allocate the money towards my Christmas budget.
Regardless of when you begin your Christmas budget, though, the steps are basically the same.
Decide How Much to Spend
Before you go to the mall or before you look through the latest Christmas catalogue, you must decide how much to spend.
After you complete the preliminary work to know how much you can afford, you should have a price range in mind for how much you want to spend.
For example, $500 to $750 max or whatever range is appropriate for your financial situation.
Once you know your Christmas budget range, you can decide how much to spend on each person on your list.
Decide Who To Gift
Once you know how much you plan to spend, you can decide who to buy for.
To begin, create a list of people in your life you wish to spend money on. Create the list in order of importance.
An example of a list could look like this:
- Significant other.
- Parents.
- Siblings.
- Friends.
- Work.
Decide How Much to Spend on Each Person
Let’s say you plan to spend $500, now you can decide how much to spend on each person.
For example:
Significant other: $250
Parents: $100
Siblings: $100
Friends: $25
Work: $25
Plan Gifts for Each Person Before Shopping
Up until this point, the process of gift giving is quite robotic.
But in this step, you can put some thought towards each of your gift recipients.
Now that you have a price limit for each individual on your list, you should come up with gift ideas in advance.
I mean, you don’t want to just go shopping without gift ideas first—it wastes time and money.
So, spend some time thinking about each individual and what they like. Then come up with gift ideas that fit the price range before you go shopping.
Shop Online First
Even if you prefer to shop traditionally, brick-and-mortar style, you should shop online first.
Check different retailers’ prices to find the lowest cost, and find the closest locations and the most efficient ways to receive the products.
Track Spending as You Go
Of course, the only way to ensure you do not exceed your Christmas budget is to track your spending.
Personally, I prefer to create my own spreadsheets.
Then once I am at home, I input how much I spent for each person into the spreadsheets as I go.
Once I reach the limit set for each person, I am finished their Christmas shopping.
Don’t Buy Everything At Once
Even though you set a target Christmas budget, it doesn’t mean you have to spend the full amount.
It’s always better to be under budget than over, right?
So, instead of buying everything at once, consider buying over the course of a few trips.
This way you will have time to assess the gifts you selected.
Perhaps the first small gift you bought for your friend is already thoughtful enough.
Tips to Cut Back Spending
Now that you have clearly defined your Christmas budget, let’s look at a few tips to save money on Christmas shopping.
Buy Turkey on Sale
In addition to the cost to gifts, the cost of groceries increases in December.
Traditionally, families get together on Christmas Eve or Christmas day to celebrate the holiday.
This can lead to expensive platters and pricey turkey dinners.
I mean, turkeys are expensive, and so are special desserts.
To save money on groceries and on your turkey dinner, buy your turkey on sale before the holidays.
Based on what I have noticed, turkeys tend to go on sale a month or so before the holidays.
Try to buy and store a nice bird rather than pay the full cost. Personally, I usually buy a pre-stuffed Butterball turkey when they are on sale for $16.99 instead of $20 plus.
Shop At The Dollar Store
Another fantastic way to save money on smaller gifts is by shopping at the dollar store.
For items like snacks and chocolate, the dollar store is a great place to save money.
Instead of paying $1.50 for a chocolate bar, you can get it for $0.77 cents.
If you’re into stockings, it’s the best place to shop for stocking stuffers.
Bake Desserts Instead of Buying Them
Desserts are an important part of the holidays.
It’s a chance to overeat and drink endless amounts of Coca Cola, guilt-free.
When it comes to Christmas time, only God can judge your level of gluttony.
The only problem is desserts are expensive. Pumpkin pies and black forest cakes can cost $10 to $20 each.
However, if you’re willing to put in a small amount of effort, you can bake a chocolate cake for less than $5.
These holidays, I’ll make blondies, brownies, and chocolate chip cookies.
Best of all, I will make it all for less than $15.
Avoid Overpriced Lattes and Holiday Marketing
Christmas time is an absolute feast for marketers.
Companies like Starbucks capitalize on consumers’ need to experience a happy holidays.
All of a sudden, they’re offering gingerbread and candy cane lattes that are absolutely delicious.
But paying more than $5 for one drink can really add up if you are broke.
Write a Nice Card
Another option is to take a year off spending money on Christmas.
Inform your family and friends in advance so they know what to expect.
Then, write a nice card for each person on your list.
More often than not, they will appreciate the thoughtfulness of your gift more than any product you could give them.
I appreciate cards a lot more now that I am older.
Christmas Budget – Concluding Thoughts
In conclusion, Christmas is an expensive time of year. It’s best to start a Christmas budget as early in the year as possible. Ideally, it should be in January so you can save for it during the year.
Before creating your budget, remember to analyze your personal financial situation to know where you stand.
After you decide how much you can afford to spend, decide who you want to spend money on.
Moreover, do your research online in advance, and plan what to buy before you shop. Furthermore, track your spending as you go and don’t buy everything all at once.
Otherwise, to save money on the holidays, look for ways to cut costs. Look for deals on dinner, shop at dollar stores, bake desserts, and avoid holiday marketing and high priced coffees.
Alternatively, avoid the cost of the holidays altogether by writing cards to those who matter.
What ways do you save money on your Christmas budget?
Happy Holidays!
Related
How to Budget – 7 Simple Steps to Build a Successful Budget
Save Money on Groceries – 14 Highly Effective Ways to Reduce Grocery Costs
Pay Yourself First – How to Pay Yourself First
I am not a licensed investment or tax adviser. All opinions are my own. This post may contain advertisements by Monumetric. This post may also contain internal links, affiliate links to BizBudding, Amazon, Bluehost, and Questrade, links to trusted external sites, and links to RTC social media accounts.
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