A Christmas budget is simply an extension of your already existing budget. If you’ve been budgeting throughout the year, you should have a good idea of how much money you can afford to spend during the holiday.
However, if you’re new to the budgeting game, I highly recommend you start with the budgeting for beginners series. It will help you determine your income, expenses, and trim out any unnecessary expenses. It will also help you come up with an overall savings plan that extends beyond the holiday.
With your budget in place, you’re ready to take it a step further and create a temporary Christmas budget that will help you manage your finances during the holidays. Let’s not delay any further and jump into how you can create a holiday budget in 6 easy steps.
How to Create a Christmas Budget in 6 Easy Steps
1. Evaluate your holiday income and holiday expenses.
In order to determine a reasonable Christmas budget based on your income, I recommend using a tool like this Christmas budget calculator. But first, you will need to know what information to put in the calculator.
To come up with this information, use the budget you should already have for your day-to-day expenses. Then take into consideration any holiday income you might be receiving such as holiday bonuses, part-time jobs, and other side-hustles.
Add everything up to figure out your average and put it into the Christmas budget calculator. This calculator will give you an amount that they believe you should be spending in relation to your income. Use this number as your starting guide.
As far as your holiday expenses, you’ll need to take a look at credit card or bank statements to determine what you spent last year for the holidays. This will give you a good idea of whether your holiday expenses is in line with what someone with your income should be spending.
Here are some of the typical expenses associated with holiday spending:
- Gifts – spouse, kids, friends, neighbors, co-workers, extended family, etc
- Decorations – stockings, Christmas tree ornaments, lights, wreaths, poinsettias, etc.
- Food – Christmas breakfasts, dinners, work potlucks, holiday parties, baked goods, etc
- Giving – Salvation Army, Stuff a Bus, Operation Shoebox, etc
- Holiday Fun – Christmas light shows, Christmas plays, Ice skating, Holiday movies, Santa pictures, parties, etc
- Misc. – stamps, envelopes, shipping materials, holiday pictures, Christmas cards, etc
Helpful Tool: FREE Holiday Budget Worksheet!
2. Decide on the total amount you’ll spend this year.
Now that you’ve taken a guess at what your total income will be (including any holiday income) and your typical holiday expenses, it’s time for you to make some tough decisions to make a reasonable Christmas budget. If you went into debt the previous year or spent way more than you felt you should, you can turn things around this year.
Set your budget total BEFORE you decide who’s going on your holiday list or how much you’ll spend on each person. Your spending should be in alignment with what you can afford to give, not what you think you should be spending on each person.
This might mean you will need to make some cuts from other spending categories or get creative and make your own cheap Christmas decorations, etc. The total amount you spend should include all holiday expenses as outlined above, in addition to holiday gifts. So, go ahead and come up with your Christmas budget magic number. Next, I’ll show you how to stick to it.
Related Reading: 20+ Ways to Have a Debt-Free Christmas
3. Determine who you’re spending your Christmas budget on and create your holiday shopping list.
Now you’ll need to list all of the people you would like to purchase a Christmas gift from. I’m not going to take credit for this idea, but I recently ran across an amazing way to create your holiday shopping list.
Basically, you list the people you’re shopping for and assign them a point value. Then you’d add all of the points together and do a little more math, but I promise it’s super easy. By the time you finish, you’ll have the max amount you should spend on each person. Like I said, not my idea but you can learn exactly how to create the best Christmas budget here.
Once you’re finished, your list should look similar to this:
Spouse $150
Kids $75
Parents $125
Siblings $75
Teacher $25
Postman $20
Neighbor $15
You will then know how much you should spend on gifts for everyone. If you spend less, that’s great, but at least you have a number to help you reign in your spending. I’ll show you some ways to save money on your holiday shopping in a second.
But first, let me share some tools that will make creating your holiday shopping list a little easier. This Christmas budget spreadsheet will help you keep track of all of your holiday-related expenses, including your holiday gifts.
Finally, here are two Christmas budget planner apps that will help you keep up with your Christmas gift shopping list — Christmas Gift List (Android) and Santa’s Bag (Apple).
Lastly, if you’re just into using good ole pen and paper, here’s a great Christmas budget worksheet for you to use.
4. Set up your Christmas savings fund.
Now, you need to make sure you have the funds when it’s time to do your Christmas shopping. You’ve determined the amount you need for holiday spending and your gift list. This is the number you’ll need to start saving in your separate Christmas savings fund.
Keep this savings fund open all year long so you won’t be scrambling last minute during the holidays to come up with Christmas money. I LOVE using Capital One 360 and I’ve had a Gift savings fun with them for around 9 years now. Every month I transfer a little into this account so I can have money to do my Christmas shopping year round.
Yep, that’s right. I shop for Christmas all through the year so I can be sure I’m getting the best deals on everything I purchase. By the time the holidays roll around, I’m able to sit around and enjoy the holiday instead of stressing over Christmas shopping.
If you need a little guidance on saving money for Christmas, check out my 12 week Christmas savings plan that will help you save $1,000 before Christmas.
Open your Capital One 360 Christmas savings account today with $250 and get a $25 savings bonus through this link only.
5. Find ways to supplement your Christmas budget during the holidays
If your budget is lower than what you expected it to be, don’t worry about it. There are so many ways to supplement your budget so that you can give more during the holiday season. Here are a few articles that will help you boost your income for the holidays:
- How to Make Quick Cash For The Holidays
- Boost Your Christmas Savings in Just 20 Minutes Per Day (my fave)
- 7 Free Online Survey Sites to Join For Extra Cash This Holiday
6. Make your Christmas budget stretch further with these shopping tips…
Finally, regardless of how big your Christmas budget is, here are some ways to help you make it stretch even further. Remember how I said that I shop for Christmas year round? Well, here are some of my best holiday shopping tips to help my budget stretch further…
- Holiday Shopping: 11 Tips and Tricks to Help You Save Money
- 10 of the Best Reasons You Need Amazon Prime This Holiday Season (hint: it’s cheaper than you think!)
- Get Cash back This Holiday (and Beyond) With This…
Some other shopping tools I employ to help me save money when I do my Christmas shopping throughout the year include:
- Always doing my grocery and holiday grocery shopping using Ibotta.
- Shopping the clearance sections of any store (plus the Target toy clearance sale during July).
- Saving Christmas gift ideas on a budget throughout the year to my pin board.
- Shopping for all Christmas decor and wrapping paper after Christmas is over.
Your Christmas Budget Made Easy
As you can see, creating a Christmas budget doesn’t have to be difficult. It should simply be an extension of the budgeting system you’ve used to guide you throughout the year.
You simply need to add a few elements such as a Christmas spending limit and holiday shopping list. With those things in place, you can do your holiday shopping with ease.
So, take a little time to set up your Christmas budget this year using these 6 easy steps. You might just find yourself having a Merry little Christmas with a fat wallet!