How to Set a Realistic Christmas Budget

Published on November 8, 2020 by Lauren

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  • Benjamin Franklin once said: “If you fail to plan, you plan to fail.”  This is true in life, and especially when spending money. Did you know most people spend almost $950 on gifts, entertaining, and travel each Christmas season?  If you fail to plan your Christmas budget, then you plan to fail at it as well. The key is that you need to set a realistic Christmas budget!


    set a realistic christmas budget


    Set a Realistic Christmas Budget:

    Christmas might be my most favorite time of year. I want to decorate, buy tons of gifts, host parties, attend parties, help those in need, show my friends and family how much I love them, and do lots of Christmas activities with my family!

    However, if I truly did all of those things the way I wanted to, I would end up broke or in debt before the holidays were even over. There are a lot of important ways to celebrate the holidays, but I am not willing to go into debt to do everything! Are you?

    Obviously, there is much more to Christmas than just parties and gifts. One way we can all honor the true spirit of Christmas is to be better stewards of our finances and set a Christmas budget.

    In order to do this, it is important to start thinking about your Christmas budget early. Here are some key steps you can use to set a budget for Christmas that won’t break your bank!

    1.) Make a List of Everything:

    set a realistic christmas budget


    Start by making a list of all the things you do as part of Christmas. Include things that are not part of your normal budget, but are only holiday-specific. This might include things like sending cards, making cookies, buying gifts, traveling, party clothing, etc.

    Once you have all of the various items written down, re-write your list and expand it to be more specific. For each item, break down what that really means.

    Consider details like how many cards you need, cost of the postage, how much baking you’ll do, whether or not you need containers to give cookies away, EVERYONE you need to buy gifts for… You can see how expansive this list might get, and it should!

    2.) Write Your List Again With Costs

    Ok, I’m going to ask you to re-write your list one more time, but this time include the cost for all those items. You might be able to use the figures from last year if you have them, or maybe you just need to look at some prices and figure it out.

    This might be a bit of work, but if you want to really make a budget that will love you back, you can’t skip this step. Write down every penny you could possibly spend!

    set a realistic christmas budget


    Now you have to take a minute and really look at the figures you have just drawn up. Can you swing that? If so, good for you! If not, you’re in good company. I hope that you’re looking at your list, eager for a way to trim it down.

    It can be hard to cut back, but it is worth it! If you are in a headspace where you can be realistic and make some choices, let’s continue! If not, put your list down and come back when you’re ready to chop!

    Take a few minutes to think about what is really important to you. If you can’t do everything, what can you live without and what do you have to do?

    3.) Start Sorting

    Sort your list into three sections:

      • things you can live without
      • things you can’t live without
      • things where you can’t decide which of the other two columns they go into

    Once you have sorted, do the math for the column of things you can’t live without. If that figure just about matches what you can really afford to spend, you’re done!

    Just kidding, but you’re closer to done than the rest of us.

    set a realistic christmas budget


    4.) EDIT MORE!

    Ok, so you either need to chop more, or you can still keep some things from that middle “can’t live without” column, or you’re right about where you need to be.

    One of my best tips when working to set a realistic Christmas budget is to narrow down again by thinking about who is really important to you. I know you want to buy presents for all the people who are important to you, but realistically, you may not be able to. Put this list in order of importance too. Spouse, children, parents, extended family, neighbors, service providers, etc. Stop expanding the list when you run out of space in the budget.

    I make it sound so easy, don’t I? I know, if it was that easy, we wouldn’t be having this discussion.

    Honestly, I’m not sure if my list is ever finalized, but at least I have everything prioritized and then I can work from there.

    For me, there is a cookie exchange party I can’t live without, so I make that a priority. I would love to bake for everyone all season, but depending on what I have to spend, maybe that’ll be the only baking I do. I can live with that.

    You can make choices about how to be creative by expanding your budget or reducing how much you spend on each person and item.

    • What gift cards have you been given but not spent yet?
    • Do you have any Swagbucks, Amazon credits, Pampers points, or Plenti points?
    • What experiences can you give instead of gifting stuff?
    • Have you tried making money doing surveys?
    • Can you start a new family tradition of drawing names (usually with extended family) instead of having to gift everyone?

    5.) Get Creative

    Other low-cost options include, of course, making gifts and having your kids make gifts. I think that this can be an undervalued option. Just because a gift is homemade doesn’t mean it will fit a stereotype of being something silly made of macaroni.

    Anything made with a nice investment of time and true thought about the recipient is well received. This is a good way to fill your budget with spent time instead of spent dollars. You can always have the kids make things as well, and then people have to love them! Just kidding.

    In the end, only you can set the best budget for your family, lifestyle, and means. Don’t let Christmas become a season of excess that leaves your bank and pockets empty.

    Follow the basic steps for how to set a realistic Christmas budget:

    • List all your Christmas spending options
    • Add details to get a solid idea of how much it will cost
    • Prioritize your options
    • Stick with the list that most closely matches your family’s priorities!

    Look honestly at what you want to do versus what you can do and then make some healthy decisions.

    Have you joined the Debt-Free Christmas Challenge this year? I’d love to have you and I share my best tips on not only setting a realistic budget but how to make extra money and stick to it without going into debt. Click here to join!

    set a realistic christmas budget



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