Christmas on a Budget: How to Save Money for Christmas!

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Planning your Christmas shopping

Ever asked yourself - How can I save money on Christmas shopping? Well, Christmas is notoriously a time when people spend tons of money and rack up tons of debt buying Christmas gifts for their loved ones.

However, once the holiday lights dim, the new year rolls in, and those credit card bills arrive and they have to open up those depleted bank account statements, it's never fun. Ever.

How much the average person spends on Christmas

Christmas is expensive! The average American spent $992 on Christmas gifts alone in 2017. That's not including travel, food or anything else fun for Christmas, like a tree! Sometimes people think that if they are buying cheap Christmas gifts, they are spending less but the truth is, it all adds up fast.

Did you know:

  • Borrowing on credit surges over the holidays?
  • Some people never get out of the cycle of credit card debt because they spend all year paying down debt only to get sucked back in due to holiday spending?
  • Credit card companies create special marketing campaigns around the holidays (and also shortly after the holidays) offering things like 0% interest offers (for limited time periods of course) to entice people to sign up?

Crazy huh? Well, that's not going to be you this year!

You know you are going to be spending money on Christmas. It happens every year and at the same time of the year too. You may not know the exact amount (which we’ll talk about how to figure out later) but you know that no matter what, you will be spending money on gifts. 

Having a plan will help you with saving a smaller amount every month instead of coming up with all of the money at once and you can avoid getting into debt as a result.

Even if you aren’t someone who spends an extravagant amount, creating a plan to save money for Christmas can definitely still help you.

Let's discuss how to save money for Christmas over the months before to make sure you get through the holidays financially sound!


1. Make a list of who you are buying gifts for and how much you need to save

First, make of list of who you plan to buy gifts for, and the maximum amount you are willing to spend on each person. I would also add any travel you may anticipate or expenses that may pop up, like food for a holiday meal. The total amount is what you are going to be saving for in between now and November.

Why November? Well, it gives you a few months to put some money away in savings. This is also typically when sale season starts and it’s possible to find some really good deals if you haven’t snagged these items already. If you can spend less, that would be great but spending more is a big NO NO because that would totally ruin your plan/budget.

Speaking of spending more, I always save an additional amount on top of what I say I am going to spend because stuff happens. I forget about a gift I need to buy for someone or something ends up being more than I had originally estimated.

Stuff happens. Turkeys burn. Kids rip their tights right before the family portraits. Somebody might forget Grandma at home and have to spend additional gas money. It’s best to add instead of go over.

By putting money away from now until Thanksgiving, you’ll be ready to go before the holiday rush starts as well as saving yourself from financial stress. No more wondering how much more you can afford to spend because that number has already been predetermined and saved for you.


2. Open up a designated savings account to use as a Christmas sinking fund

Once you have decided what you will be saving from now until Christmas, you can decide how best to organize the funds to keep you from touching them. 

Some people, use sinking funds as a way to prepare gift-giving season, so they don't have to come up with a large amount of money at once.

To do this, you can open up a savings account that you designate specifically for Christmas or holiday savings and name it accordingly. You could also consider automating your deposits.

You shouldn't be able to easily transfer funds back and forth from it, otherwise, you might find that you are spending instead of saving the money you are trying to put away for the holidays. When the time comes to transfer the sinking funds into your checking, you won't feel guilty, spending it all on gifts because that is your intent for this money!


3. Build saving for Christmas into your budget

Now that you know how much you need to save, you'll want to incorporate this amount into your budget. How do you do that? Depending on how much you need in total to purchase your gifts, you'll want to divide that dollar amount by the number of weeks you have between now (when you start saving) and Thanksgiving.

This will give you a good idea of how much you should be putting away each week towards your gifts. You can then sum up that weekly amount to determine what your biweekly or monthly savings should be. You also might want to consider automating deposits into your designated savings accounts.


4. Plan your Christmas shopping ahead and shop smart

November is the beginning of sale season and it's also a time when you can easily get side-tracked with all the fancy advertisements, but if you have a game plan it’s much easier for you to stick to your guns.

I highly recommend you shop online and get your gift buying out of the way early but if you decide to go to a store, then plan ahead - map out what days you'll be shopping, what stores you'll be visiting and what you'll be buying. Also, you'll want to leave those credit cards at home and use only the money you have saved.

Remember the whole point is to avoid racking up any holiday debt whatsoever.

You also want to make sure you use any coupons or cash back apps, like Rakuten or Ibotta, to make sure you are getting the most bang for your buck when spending.

I love shopping at places like Kohls and Target because then I can save the instore rebates, given in the form of store credit or gift cards, and use them on a later purchase. This is how I was able to buy myself a new winter coat and snag Christmas presents for my friends with children for free!


5. Stay motivated to save money for Christmas

As usual, it’s important to find any expenses in your budget you could cut or spend less in. This may be a good time to decide now on what cheap or free activities your family may be participating in this summer while school is out. Libraries always have great summer programming for both children and adults alike.

If you’re single, it may be that you travel less or also find free things to do. Summer can either be a cheap or expensive season based upon your interest and dependent on where you live. 

I’m also a firm believer that we can’t save what we don’t earn so while running your numbers, see if it’s reasonable, or even needed, for you to pick up a side hustle for Christmas. 

Finally, in order to successfully execute your plan, you are going to need to stay committed and it's a good idea to get a savings partner (AKA an accountability partner) so you can keep tabs on each other and help each other succeed. Think of someone that would be interested in joining you as you save for the holidays and plan weekly check-ins with them!


6. Get creative with your Christmas gift giving

I’m a firm believer in less is more. I want to buy the world for people but I need to remind myself that they probably don’t need it as much as I think they do. A shirt in one color is better than five different shirts in five different colors. In many instances, giving just one gift is enough and will help you stick to your budget.

Enjoying making things? Another creative way to save money on Christmas gifts is to make gifts yourself. It could be physical items like clothing or trinkets or homebaked goods like cookies and cakes.

You may also think about giving experiences instead of things. I’ve had a lot of stuff given to me over the years but experiences are what I remember most. Create memories instead and watch your money last forever.



With these tips, you should be able to put a solid plan in place to avoid holiday debt and come out on the other side of the Christmas season with your financial goals intact. The goal is to stick to your plan no matter what.

Here's to a happy and financially sound holiday season!

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