Christmas On A Budget: How To Save Money For Christmas!

Ever asked yourself - How can I have a great Christmas on a budget? 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. Many times, without really having a plan to pay off debt.

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.

Planning your Christmas shopping

That said, in this article, we'll cover how you can get through Christmas on a budget. But first let's discuss what Christmas spending looks like for most people.

How much the average person spends on Christmas

Christmas is expensive! The average American spent $976 on Christmas gifts alone in 2019. 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.

Holiday finances - 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)? They offer 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.

Expenses to consider when creating your Christmas budget

First things first, when creating your Christmas budget, you need to consider all of the expenses, not just the gifts. Things such as wrapping paper, boxes, bows can add up quickly.

You can save money on these items by shopping at Dollar Tree or Dollar General Stores for your gift wrapping items.

You also want to consider your travel expenses such as gas, accommodations, or airline tickets. You can save money on travel fair using sites like and making reservations in advance for cheaper rates.

If you are considering having a Christmas Dinner at your home, you will need to factor in the expense of all of the food you need to purchase. Keep this in mind when making your guest list because the more, the merrier, but the more people you have, the more expensive it will be.

By creating a Christmas budget and savings plan, you can have a great holiday without racking up too much debt.

How to save money when you are planning Christmas on a budget

Now, 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 a 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 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 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.

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 have extra money set aside than go over budget.

By putting money away as early as you can until Thanksgiving, you’ll be ready to go before the holiday rush starts. You'll also be 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 by you.

If you are short on gift ideas, check out our gift guides:

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

Once you have decided what you will be saving from now until Christmas, you can decide how best to organize the funds so you don't spend it. Some people use sinking funds as a way to prepare for the 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! A great account type to save for Christmas is a Christmas Club Account.

3. Build saving for Christmas into your budget

Now that you know how much you need to save to prepare for Christmas, 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.

4. Plan your Christmas shopping ahead and shop smart

November is the beginning of the sale season. It's also a time when you can easily get side-tracked with all the fancy advertisements. However, 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. 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, to make sure you are getting the most bang for your buck when spending. I love shopping at places like Kohl's and Target because then I can save the in-store rebates. (Rakuten is an affiliate links which means if you use their service we might get a small commission. This helps us keep our platform and courses free!)

These are usually given in the form of store credit or gift cards, and I can 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 on. 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.

In order to successfully execute your plan, you are going to need to stay committed. 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 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 home-baked 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.

Tips to earn more money towards savings for the holidays

If your Christmas budget isn’t what you hoped it would be, you can work towards earning more money to save for the holidays. Some companies are known for hiring temporary help through the holiday season. This is an excellent opportunity to make extra cash for your Christmas savings account.

Would you like to save even more cash while working? There are also companies that offer generous employee discounts, and you could shop where you work and save even more money.

Another great option to increase your savings for the holidays is to start a side hustle which you can work from home. A side hustle is a part-time gig that you can fit into your busy schedule. Some side hustles you could try are:

There are many side hustle opportunities to make quick cash fast. You can also find extra money by cashing in your spare change and depositing it into your Christmas savings account.

Christmas on a budget: Alternatives to buying presents

There is nothing more precious than the gift of time or lending a helping hand. Rather than buying a gift, you can help a friend or a loved one in other ways. Maybe you have an older or disabled loved one that can’t get around very well. You can help them by doing household chores, gardening, or running errands for them.

A picture is worth a thousand words. You can pick up photo albums cheap at the Goodwill or Thrift Store and make a personalized photo album or scrapbook for your loved one. Shutterfly is an excellent site to create photo albums and gifts at a great price. They offer coupons and discounts, and it’s easy to upload your photos and order.

Do you have something one of your friends or relatives just raves about every time they see it? Can you part with it? Maybe you have a designer purse your cousin can’t afford, and she’d love to have. The gesture of giving up something you love to make someone happy is one of the greatest gifts of all.

Another alternative to buying gifts on a Christmas budget is to shop secondhand. You can find fantastic deals on gorgeous jewelry, name-brand tools, musical instruments, electronics, and more at pawn shops, thrift stores, and online. You can save up to 50% off retail prices by shopping secondhand.


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. If you need motivation to save money, leverage one of our completely free savings challenges to get the ball rolling!

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

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