The holiday season is just around the corner, and for most of us that means celebrating with friends and family, eating way too much food, and taking time off from our busy lives to focus on what really matters.
But with all of those festivities, many Americans find themselves strapped for cash, in credit card debt, or overdrawn on their bank account.
A little bit of planning can go a long way here. You can save money for Christmas ahead of time and have a debt-free holiday season!
The last thing your friends and family want is for you to go into credit card debt to buy them a gift (and if they do, it’s probably time to find new friends).
If the most wonderful time of the year is causing you to stress more than celebrate, check out these Christmas budgeting tips on how to save money during the holidays!
How to Save Money During the Holidays in 9 Easy Ways
These holiday shopping tips will help you keep your spending under control and avoid Christmas debt.
I personally love to save money for Christmas ahead of time in a sinking fund.
A sinking fund is where you save money in advance for large or irregular purchases (like Christmas shopping!)
The average American spends almost $1000 on Christmas!
That’s honestly pretty crazy to me (but I don’t need to buy flights to see my family or spend hundreds of dollars on each person on my list either).
And even more of a reason to start saving ahead of time so that $1000 of Christmas spending doesn’t bust your December budget.
Plan to spend $600 for Christmas gifts? Try saving $50 a month so the money is there ready to go in December!
Along with saving for Christmas ahead of time, here are 9 Christmas budgeting tips to help you save money this holiday season.
Related: 9 Essential Sinking Funds Categories to Add to Your Budget This Month
#1 – Set an Overall Budget for Christmas Gifts
If you’ve been reading my blog for awhile, you know that I love budgeting. Breaking down your spending into categories and making decisions on where your money goes is so empowering!
Did you also know that 86% of millennials overspent on Christmas gifts last year?
A budget for Christmas gifts solves this problem.
How much can you realistically afford to spend on gifts this year?
I recommend making of list of each person you’re buying for and setting a spending limit. What you spend on your spouse is probably different than your favorite coworker, and that’s totally normal!
How much money do you have set aside for gifts already? How much can you realistically save between now and Christmas?
Grab a copy of my free holiday budget template to plan out your gift-giving budget this year!
#2 – Make a Christmas Gift Shopping List
Once you have an overall holiday budget set, the next thing you’ll want to do is make a shopping list.
My free budget template will help you do this. Basically you just want to make a list for everyone you’re buying for, how much you plan to spend, and what you plan on gifting them.
As someone who personally hates shopping with the all the holiday crowds, creating a list like this allows me to be efficient with my time and money.
Instead of perusing around the mall for hours, I’ll go in with a plan and grab the things I need. It’s so easy to get overwhelmed with choices and overspend if you don’t know what you need to buy ahead of time!
And if you’re planning to do a lot of online shopping, make sure you sign up for Rakuten!
If you shop through Rakuten (either on the app for your phone or through their website), you’ll earn cash back for things you planned to buy anyway!
There are so many stores listed and you can also download a browser extension to make it even easier. Check it out here!
Making a list for Christmas shopping is a lot like making a list for the grocery store. You’re less likely to impulse buy things you don’t need and actually stick to your budget!
Setting a budget and making a shopping list is a surefire way to save money during the holidays.
#3 – Start Shopping Early
One of my best Christmas money saving tips is to start early!
Once you have your budget set and have planned out what you’re going to buy, you can get all of your shopping done in just a few hours.
I used to be such a last-minute shopper and it would stress me out every year (anyone else’s parents impossible to buy for??)
But over the years, I’ve learned to pick things up as I go.
See the perfect photo frame for your mother-in-law at TJ Maxx? Go ahead and grab it even though it’s only October!
Pull the money from your Christmas sinking fund to balance your budget this month (this is why I love sinking funds so much- they allow you to purchase things you haven’t budgeted for that month with no stress!)
Going to a local craft fair with friends? Grab that handmade ornament that your grandma will love. And feel good that you’re #shoppinglocal as well!
Shopping early also allows you to avoid the holiday price hikes in December.
It’s a supply and demand thing: tons of people are shopping for gifts at the same time (increasing demand), which in turn causes prices to increase.
Avoid this and save money during the holidays by shopping early!
#4 – Don’t Use a Credit Card
42% of Americans plan to go at least $500 in debt during the holidays. That’s a huge percentage!
The best way to avoid credit card debt is to not use a credit card.
If you find yourself tempted to overspend, don’t use your credit card. It’s that simple!
Think about it- would your friends and family want you to take out a 25% loan just to buy them some fuzzy socks and candles for Christmas? Heck no!
That’s basically what you’re doing when you put stuff on your credit card and don’t pay it off in full every month.
Please don’t go into credit card debt for Christmas gifts this year. Even if that means getting less expensive gifts or not shopping for everyone on your list.
Create a budget for Christmas gifts, and stick to it. Not paying credit card interest for months after the holidays will save you so much money!
Credit card debt is so not worth it.
Related: 5 Credit Score Myths That are Keeping You Broke
#5 – Gift Your Time
Another great way to save money during the holidays is to gift your time instead of a physical present!
I love this idea for certain family members, especially grandparents.
Grandparents want nothing more than to spend time with their grandkids, so give them a “coupon” to take them out to lunch, go to a museum, or spend an afternoon cooking.
This also works great for family members or friends with young kids. Offer to babysit for free so they can enjoy a night out!
It’s a great way to not spend any money (or delay it by a few months) and your time is ~priceless~ so it will be super meaningful as well.
Create a coupon book or a cute flyer (my favorite FREE way to design things like this is with Canva) and wrap it up so you still have a gift to give.
Most people don’t want more stuff for Christmas, they want time with loved ones. You get to save money on Christmas, stay within your budget for gifts, and your loved ones get to spend more time with you!
#6 – Suggest a Secret Santa Exchange
The easiest way to save money during the holidays is to buy less Christmas gifts!
When did it become a thing to buy a gift for every cousin, coworker, aunt, uncle, etc? I love the sentiment behind giving, but I think it’s gone a bit too far in our culture.
A secret santa exchange is a fun way to incorporate gift-giving into your celebration, without spending hundreds of dollars on everyone in your family.
This works especially well for large families and friend groups.
Have everyone draw a name out of a hat and set a spending limit. Everyone knows exactly who they’re buying for and how much to spend.
No more awkward “cousin Jenny bought me a gift but I didn’t think to get her one this year” moments. Because that’s honestly the worst.
Only buy a gift for that one person instead of everyone, which saves you money without killing the holiday spirit.
My husband’s extended family takes it a step further and has each person write down 3-5 things within the allotted price range that they would like to recieve as a gift.
Some may think it takes some of the Christmas magic out of the holidays, but I love it because you know exactly how much to spend and exactly what to get.
And it helps you avoid awkward gift-giving moments. A win-win situation if you ask me!
#7 – Create Homemade Gifts
I know that some people are more crafty than others, but homemade gifts are a great way to save money during the holidays and add a thoughtful touch to any gift.
Maybe you’re great at making Christmas ornaments, scrapbooking, or painting. Use those talents to create something special for your loved ones!
Or maybe you’re not as crafty. That’s cool too!
My favorite cheap, pseudo homemade gift is getting a photo framed.
If you’ve recently had a life event (wedding, graduation, etc), frame a photo of you and the person from that event. Someone paid all that money for professional photography, so leverage those beautiful photos and give them as gifts.
This one is also a hit with grandparents too.
Some other ideas are baking cookies, writing a handwritten note, or putting together a DIY beauty kit. Pinterest is full of amazing DIY ideas that will help you save money on Christmas gifts!
#8 – Reuse Gift Bags and Tissue Paper
This one might be a no-brainer, but does anyone actually buy gift bags anymore?
I always raid my parents’ wrapping supplies during the holiday season (and anytime I gave a gift, really).
I’m sure you have gift bags that could use a second life laying around. And if not, I bet you know someone that does.
We also got a TON of gift bags for our wedding that we still reuse to this day!
I dislike spending money on wrapping supplies so much. I know they’re relatively cheap, but the costs can add up and it just feels very wasteful to me!
I’d rather spend that money on the actual gift itself, instead of what it’s wrapped in. Reusing bags means you won’t have to add a line item in your Christmas budget for gift wrap as well!
#9 – Keep Things in Perspective
If you’re in a season of paying off debt, recently graduated college (or are still in college), or made another large purchase this year, it’s a-okay to go smaller on Christmas gifts this year.
Your family wants to spend time with YOU.
It’s not about the actual presents you buy, how much money you spent, or if you got the latest piece of technology.
If you’re a Christian like me, Christmas is a time to celebrate the birth of our savior and spend time with loved ones. It’s not about how much money you spend on Christmas gifts.
So keep that in perspective this year.
If you paid for your wedding this year, it’s okay to not go crazy with gifts.
If you’re still in college, it’s okay to not go crazy with gifts.
If money is tight (for any reason), it’s okay to not go crazy with gifts.
And if gift-giving stresses you out, talk to your family members about it. Set expectations, realistic spending limits, and remove the anxiety of the unknown out of the holiday season.
And don’t forget about these tips on how to save money during the holidays to help you budget for the Chirstmas gifts you DO plan to buy this year.
Like with most things in life, it’s not about how much money you spend. Making memories with loved ones is free.
And don’t forget to grab your FREE copy of my Christmas budget template to help you plan out your holiday shopping and save money on Christmas this year!
-Megan
This post was all about how to save money during the holidays and plan out a realistic Christmas budget this year.
Megan is an automotive engineer, newlywed, and personal finance blogger from the midwest. She found her passion for personal finance after starting her first “real job” after graduating college. Now, she helps other young professionals become more intentional with their money in order to build wealth for financial freedom. In her free time, she loves to travel, hike, and play euchre with her family. Read more about her story here.