How To Budget for Christmas: Without Going Into Debt!

How To Budget for Christmas: Without Going Into Debt!

You know what they say: Christmas is a time for giving!

But unfortunately, Christmas is also a time for overspending, extravagance, and going into debt.

It has become so ingrained in us that we need to buy everyone everything that their heart desires, that most people don’t even bat an eyelash at spending way more than their finances allow them to and racking up some credit card debt over the holidays.

But I disagree with this practice!

As someone who has been in debt and is now out of it, I can tell you that nothing is better than living within your means.

So in this post, I’m going to show you how we create a realistic Christmas Budget for our family, without going into debt… or missing out on any of the holiday fun!

And if you prefer to watch instead of read, check out this video:

How to Create a Christmas Budget

1) Determine How Much You Can Spend

This is where most people make a mistake when it comes to budgeting for Christmas: they start buying first, and they don’t look at their budget until after they have already spent too much.

Start by looking at your budget first and figuring out exactly how much money you can afford to spend.

I recommend never going into debt for Christmas and only putting things on your credit card if you can (realistically) pay it off in the same month that you purchased it in.

If you are already in credit card debt, don’t go any deeper into debt.

If you can only afford to give one small gift per person to your immediate family members, then that’s all you should do. Trust me, Christmas isn’t worth going into debt for.

A lot of parents have a hard time with this because they are worried about their children feeling left out. But honestly, it’s just part of life!

If our kids wonder about their friends receiving more gifts for Christmas than they get, we talk with them about money.

We discuss how everything in life costs money, every family makes a different amount of money, and how every family chooses to prioritize their money differently.

Check out this post if you want more tips for how not to worry about keeping up with the Joneses.

Decide on an amount that you will spend on Christmas that will work with your budget, and determine to stick with it no matter how awesome that cool new toy is!

2) Start Saving Early

The earlier that you start thinking about your Christmas Budget, the better prepared you will be to purchase the gifts on your list without going into debt.

Have a Christmas Bank Account

One way to plan for Christmas all year round (and to let yourself spend a little more if you want to) is to create a Christmas Bank Account.

To start a Christmas bank account, all you need to do is take the amount of money that you would like to spend on Christmas and divide it by 12. Then, when you get paid each month, take 1/12 of the money and put it into the bank account.

When Christmas rolls around, you will have all of your Christmas money saved and ready to use.

(Check out all 7 Bank Accounts that every family should have here.)

A Beginner's Guide to Creating a Christmas Budget

3) Start With Your Immediate Family

Once you know how much you want to spend on Christmas total, decide how much you want to spend on your kids and on each other.

We didn’t used to start with our immediate family when we determined our Christmas budget…

…and then there were a couple of Christmases where Ross and I didn’t get each other a single thing because we had spent our Christmas budget before we got around to spending anything on each other.

Now we always start with how much we want to spend on our immediate family before we even think about spending anything extra on anyone else!

4) Make Your Lists

Now take the total amount that you are going to spend on your immediate family, and decide how much you want to spend on each person.

You don’t have to worry about spending the exact same amount of money on each child…

I actually don’t think that I have ever spent the same amount on each child. And that is because when we are deciding what goes on their lists, we figure out what they need first.

I’ve found that it changes from year to year who ends up getting more because their needs change from year to year.

Last year we spend more money our younger daughter because she was 18 months old and had primarily been playing with her sister’s old toys. She needed her own special doll to play with and some other toys that weren’t just hand-me-downs.

This year our oldest daughter will be getting more gifts because she has more needs.

We have never seen the point in spending more money on one child just to even the playing field because, honestly, kids don’t care how much you spend on them or their siblings.

As long as you are giving gifts to your children that they truly want or need, they will be happy.

(If you want to see exactly how we make our lists for our kids, check out How to Have a Minimalist Christmas With Kids.)

I often like to follow the “want, need, wear, read” rule, but I don’t use it every single year. Some years they don’t get any new clothing, and sometimes they have multiple needs. But if you are trying to have a simplified Christmas list, it’s a great place to start.

5) Talk To The Grandparents

Getting the grandparents involved is a great way to save money and still get your children presents that they would love.

Like I mentioned in this post, almost as soon as I know what I want the girls to receive for Christmas, I call my mom and see if there is anything on the list that she wants to get them.

This helps us save money, it reduces the clutter in the house because I’m just re-distributing the gifts that I already wanted them to receive, and it lets my mom know that I will like everything she gets them even with my Minimalist preferences 🙂

How to Budget for Christmas

6) Then Decide on Extended Family Gifts

Only after you’ve figured out what you can afford for your immediate family should you figure out if you want to exchange gifts with your extended family.

This concept might seem strange if you’ve always given gifts to your extended family, but you actually don’t have to continue doing this… especially if you are on a tight budget.

Don’t Be Afraid to Change What You’ve Done in the Past

When we had two incomes before had children, we did extended family gifts for both sides of the family every year.

But once we became a single-income family, we decided to change how we did things.

We now only exchange gifts with the side of the family that we are spending the holiday with.

Draw Names

Another way that you can save money on extended family gifts is to draw names instead of just buying something for everyone.

We did this with both sides of our family even before we were on one income.

It’s a nice way to spend more money on a nicer gift for someone else, and it allows you to receive one nicer gift instead of a bunch of things that you don’t really want or need.

Budget Boosters

If you are reading this and thinking that you haven’t saved enough money for Christmas this year, here are some things you can do:

1) Sell Some Things

Who doesn’t like earning some extra money… and selling some items will also help you get rid of a few things before you get a bunch of new stuff in your house that you need to declutter.

(Just kidding… I love Christmas, just not clutter that can sometimes come with it :D)

2) Decrease the Number of Gifts

If you don’t have enough money to buy your kids all the gifts on their list, scale things back, and just give one or two gifts per child.

You will be able to get them something a little nicer this way as opposed to if you buy them a lot of cheaper gifts.

How to Create a Family Christmas Budget

3) Buy for Less People

It can be hard to decide not to exchange gifts with extended family or friends, but I promise that you will be far less stressed about sticking with your budget if you have fewer people to buy for.

And remember that just because you decide to buy for less people this year, doesn’t mean that you can never do gifts with your extended family again.

Once you get your budget under control and pay off any debt that you have, you can always go back to buying for everyone again.

And remember that you can always draw names if you still want to participate in the extended family giving without having so much financial burden!

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In Master Your Money, you will learn how to 

  • Calculate Your Net Income
  • Track Your Spending
  • Calculate Your Monthly Expenses
  • Determine Your Fixed & Flexible Expenses
  • Set Up a Budget
  • Pay Off Debt
  • Create Savings Accounts
  • Donate to Charity

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Plus you will receive the Money Mastery Workbook and Spreadsheet and email support from me anytime you have questions.

I hope to see you inside the course!

(Or if you are more of a do-it-yourself kind of gal, you can check out my DIY Master Your Money Resources!)

Want 7 Extra Hours Every Week? Grab the Streamline Your Home Quick-Start Guide!

You may also enjoy…

If you are looking for other ways to make your holidays easier, you might enjoy

How to Have a Minimalist Christmas With Kids

How to Meal Plan for the Holidays Like a Minimalist

The Best Intentional Gift Ideas for Kids

Should You Declutter Before or After the Holidays?

See you on the next one! Kassy
How to Create a Family Christmas Budget