Holiday budgeting isn't always easy. You may have to plan months ahead to avoid overspending on your holiday budget. Follow these tips to stretch your holiday budget as far as possible and maximize your holiday budgeting results.

The Complete Beginner Guide To Holiday Budgeting

The holiday season is a wonderful time of the year, with plenty of family, friends, and some good old-fashioned gift-giving. If you are planning to give gifts this month, holiday budgeting is essential as it helps you avoid overspending.

These tips will help you avoid going overboard on holiday spending and enjoy the season with as little stress as possible.

Beginner Guide to Holiday Budgeting-

Why You Should Start Your Holiday Shopping Early

It’s hard to believe it, but Christmas is just around the corner! While some people can go overboard in regards to over-commercializing the season and buying Christmas gifts, in particular, holiday shopping can be done in a wise fashion without breaking the bank.

Holiday Budgeting Helps You Afford Gifts

Not everyone is a fan of budgeting, but living with a budget lets you plan for things that will be happening in the future and save for them in small increments. This is how we afford Christmas gifts for our friends and family. We pull out a set amount each month to go towards Christmas presents.

When the time comes to buy gifts, we use our credit cards to make the purchases so that we can earn the rewards points. Then, we pay the card off with the saved cash. Not only does this allow us to save money throughout the year, but it also lets us easily make purchases throughout the year if we see a deal that will save us money.

You Can Avoid Debt With Holiday Budgeting

The best way to get started with your holiday gifts when you want to avoid big bills in January is to make sure you can really afford what you are buying. In fact, I never spend a dollar on anything I don’t have enough cash to cover in the bank already. This this stringent policy has helped me avoid ever paying a cent in credit card interest.

If you have trouble with this each year, set up an automatic savings plan with a dedicated holiday savings account. You can put in a small amount each pay period instead of paying all at once.

For example, saving $20 per paycheck will give you about $500 per year in holiday savings. Whatever your gift budget is, divide that by 25 to calculate how much you need to save from each paycheck.

Last-Minute Christmas Gifts Are Not Always a Good Deal

The advertising industry loves people who go shopping for last-minute Christmas gifts. In fact, many companies thrive during that time.

There is a misconception that the weeks leading up to Christmas are the time to get deals and save money on gifts. However, this could not be further from the truth. Take big-screen televisions, for example. That is a staple of the Black Friday crowd, yet the best time to buy them is in late January through early February as the next models are rolling out. This is when people want new TVs to watch the Super Bowl, which results in lower prices on last year’s models.

The point is that you need to be an informed consumer since this enables you to save money and not spend unnecessarily. If you’re pressed for time, you might be better off just getting them a unique gift card rather than overpaying for a specific item!

More Time Means You Can Be Selective

As a parent and someone who likes to be frugal, we want to make sure that we’re purposeful in what we give our children. They already get enough toys and presents from their grandparents that we don’t need to add much more to the pile.

By planning ahead for their Christmas shopping, we can be more selective and get a few things we know that our kids will enjoy. Not only that, but it allows us to take advantage of sales as we see them, which lets us stretch the money we have set aside for them even more.

It’s not intended to indulge our inner Scrooge, but we’d rather save some of the money we have set aside for Christmas gifts and use it on experiences for the kids throughout the year. We’ve funded things like swimming lessons, going to their favorite restaurant, and going to see the circus with the money we saved because we didn’t go crazy with our spending.

Holiday Budgeting Rules to Consider

Just like Santa, you should make a list and check it twice. But who should be on your list, and how do you decide on a budget or what to buy your loved ones?

Consider these rules to help you with your gift giving this year.

Limit Your Gift List

It is easy to give gifts to everyone, but I suggest limiting your gift list to people who really deserve something. No co-workers, very few friends, and only close family make it onto my list.

I did have some friends who were perpetual gift givers, and I devised a plan to break myself out of their list. To save money, I suggested that rather than give gifts, we meet for a holiday happy hour. I like happy hour anyway and prefer my friend’s company to gifts. That also gets me out of the guilt of having to give something back.

My list is now down to just my parents, sister, wife, kids, and a little something for my wife’s family. That’s it.

Create Spending Tiers

Aside from just creating a budget for gifts, create a list of everyone you want to buy a gift for. Put your closest friends and family on the “A” list and pick a price level for those people. Put your less close friends as “B.” Maybe list co-workers as “C” or “D.”

Use that tier system to set price limits. Maybe you will spend up to $50 on each “A” gift, $40 on each “B,” and so on. You pick the friends and the levels, so you choose the budget within your means. However, you have to stick to it for it to work. Break it down so everyone added up fits within your gift budget.

By forcing yourself to budget per person, you keep yourself within your total budget.

However, you might do non-traditional gifts to save money, too. Try making something like a baked good for some people. That can save a lot of money.

Use a Shopping List

Once you know who you are going to buy gifts for, you need to decide what to buy. Not only does having an actual Christmas shopping list of items for people help you stay on track, but it can also help you strategize your spending to get what you really want to buy for that person in your life.

The list can be as simple as a mental note of things that catch your eye throughout the year or making an actual list. The point is that a Christmas shopping list can help you plan what you’re going to buy and avoid impulse purchases that can derail your budget.

Thoughtfulness Means More Than Money

At the end of the day, most of us care more about the thought than the value of presents. Take the time to think through the best gift you can give someone. Here in Ventura, a day trip to the beach might be a lot more meaningful and less expensive than a new tech gadget.

So, something that most of us don’t anymore. Take time to do something meaningful for someone you care about. Who knows? It could even save you a few bucks.

Never Go Into Debt for Gifts

Whatever you do, never go into debt buying holiday gifts. Many people find themselves spending years paying for gifts that give only a moment of happiness. Instead, focus on doing the best with what you can afford.

Your friends and family care much more about sharing great moments and experiences than presents on an arbitrary day of the year. Remember what the holidays are really about, and you might find yourself living a richer holiday season regardless of your financial situation.

8 Easy Ways to Stretch Your Holiday Budget

The holiday season can be an expensive one. I’ve spent thousands of dollars over the years on gifts for family and friends. The worst thing that can happen is that at the end of the holidays, you find yourself broke or in debt from your holiday season spending.

Here are some tips to avoid a holiday spending hangover before it starts.

Holiday Budgeting Guide-

Search for Sales

My mom gave me an important lesson while growing up. She told me to never pay full price. While it might be stingy to hunt the sales racks for holiday gifts, you can easily find tons of specials and deals this time of year.

I suggest taking a look at Honey, Slick Deals, RetailMeNot, Brad’s Deals, and other coupon sites to find the best deals. If you have a specific gift in mind, make sure to check Amazon, Google Shopping, and give it a zap with Red Laser to make sure you have the best price.

Take Advantage of Free Shipping

I regularly shop online, and I never pay for shipping. If you are smart and watch the deals, most stores will send you what you want at no additional charge.

I have an Amazon Prime membership, which is worth the cost to me. Not only do I get free streaming TV and movies on my Roku and free books for my Kindle, but I also get free two-day shipping on every purchase. If you have a .edu email address, you can get even better deals with Amazon Student.

Avoid Fancy Cards

I know it is fun to open a card that sings to you, but is that really worth $6? The average greeting card costs between $2 and $4. It is easy to find great cards on the low end of that average. Just take a few minutes when you are at the grocery store, drug store, or Walmart, and pick a fun card that doesn’t break the budget.

Sure, an extra $3 does not sound like much. However, if you buy three, four, or five cards, that $3 can easily turn into $20 you didn’t need to spend. Make sure you exclude frivolous spending like this when you are doing your holiday budgeting.

Think About Coupons

Shopping with coupons and getting a great deal is a year-round endeavor. While there are tons of doorbuster deals on days like Black Friday and Cyber Monday, you can find coupons that give you significant holiday savings over buying in December.

Give Free or Inexpensive Gifts

Holiday budgeting doesn’t mean you have to give people an Xbox or gold jewelry as a holiday gift. Instead, consider lower-cost gifts that are more thoughtful rather than expensive.

I have seen people give away homemade gifts like infused vodka, homemade pickles, or other fun presents from the kitchen. If you are crafty, knitted hats and scarves make great gifts. Just beware of the ugly sweater!

Comparison Shopping

When you’re busy Christmas shopping, comparison shopping is a must! You can often find items that are considerably cheaper elsewhere just by doing a little legwork. This can really help with your holiday budgeting.

It drives my wife nuts at times, but when we’re out shopping, I’ll pull out my phone and check a price against what Amazon is charging. It’s not always perfect, but oftentimes, you can find it for cheaper there. There are various other phone apps you can use, but the point is you need to be comparison shopping if you want to save money on your Christmas shopping.

Don’t Go Shopping With the Kids

We learned early on as parents to not involve the kids in Christmas shopping. Why? Because they’ll ask for things that could cause you to spend more as a result. Not only that but taking them shopping can also throw you off the task at hand and make you less focused on what your holiday budgeting parameters.

If you have kids, you know they’re always asking for things. It’s part of their nature. Take advantage of that by making a list or remembering what they mentioned wanting and use that as your guide along with your Christmas shopping budget.

If going shopping without them is a challenge, maybe try to swap babysitting duties with another family so you both can be focused on your Christmas shopping.

Teddy bear in box- Holiday budget guide-

Think Outside the Box

An often overlooked way to save money on Christmas shopping is not considering used items a viable option. It may sound cheap, but you can often find very good items, especially things like toys, at a very reasonable price at thrift stores or Goodwill. The key is to know what to look for and have a keen eye for what may be of good value.

While this option may not be a good one for everyone on your Christmas shopping list, it can be a great way to save some money on Christmas shopping.

5 Gift Ideas if You Didn’t Plan Ahead

If you’re not someone who subscribes to getting your Christmas shopping done early, you’re likely looking for last-minute Christmas ideas that won’t destroy the efforts you put into holiday budgeting. The problem with many of those ideas is that most of them are no good!

Fear no more, as this will help the creative juices flow so your Christmas gift is not yawned over.

Gift Cards Are Always a Good Christmas Idea

Assuming you’re shopping for someone who loves them, then a gift card is a great last-minute Christmas idea. Virtually all stores offer them nowadays, and it allows people to get what they want. Just make sure that you include the receipt so that the recipient will still be able to use your gift in case they lose the card.

Also, remember that if it’s Christmas Eve and you are scrambling for a gift, many grocery stores offer dozens of different gift cards to choose from. For even more convenience, head to GiftCardMall to shop for tons of different gift cards, including ones you can send via email.

Give the Gift of Amazon

Who doesn’t love Amazon? I know I do since you can buy virtually anything you want from them.

You have several options for a last-minute Christmas idea with Amazon. It’s possible to go the gift card route for either Amazon or cards for other merchants they sell. You could also buy the recipient a year subscription to Amazon’s Prime service, a season of their favorite television show, or the latest book from their favorite author.

Homemade Coupons

I have several friends who have either given or received homemade coupons, and they’re always a big hit. What I like about them is you can see the thought and time put into them. The beauty of homemade coupons is you can tailor them to the recipient.

They can be such things as:

  • Free babysitting for a date night
  • Movie night to go see a new release movie
  • Lunch out every month for three months

These are just a few of the possibilities, and they really depend on who is receiving them as to what you may want to give.

Create Your Own Gift Basket

This last-minute Christmas idea is along the same lines as homemade coupons in that you create something on your own that the recipient would like. The basket can be as extravagant or as frugal as you like.

Seeing as this is a personal finance blog, we’ll go with the more frugal approach. You can go to the dollar store and buy a basket for a few dollars and fill it with something the person would like. It could be the makings for a movie night at home or the theater, ingredients for a nice meal at home, or souvenirs from their favorite sports team. The theme is up to you!

Give the Gift of Experiences

When you are crunched for time, remember that creating memories is far more valuable than more clutter for your home.

Thinking outside the box is a great way to approach this mindset. Head to Groupon or a similar coupon site for things like cooking classes, day trips, weekend getaways, date nights, concerts, scavenger hunts, a special dinner at home, or an urban exploration day. Once you purchase the experience, print out the information about it and gift it to your loved one!

What To Do If Your Holiday Budgeting Failed

If you did not have a good savings cushion for your holiday shopping or you didn’t stick to your budget, you have hit the dreaded holiday spending hangover.

Like the morning after you visit the bars, sometimes you have to deal with a hangover. You spent too much and can’t go back and fix it, so you have to press forward and tackle the problem head-bon.

Assess Your Problem

If you have overspent, it is time to assess the damages. In the event you used multiple credit cards, gather your balances (which is easy if you use a site like Empower). If you only used one card, pull up your balance online and see where you stand.

Look at your monthly budget and find places you can cut and put extra into your debt. The faster you are paid off, the less you will spend on interest. Why throw money away with credit card companies when you can be debt-free?

If you have a regular savings contribution, it is a good idea to divert some of that money to your credit cards. Make sure that is only temporary, however, and don’t get in the habit of stopping your savings.

Let the Debt Snowball Begin

When your holiday budgeting falls short and you have come up with an extra funding source, put every available dollar into your debt (while keeping your emergency fund intact just in case) to clear your holiday debt.

Prioritize Holiday Budgeting for Next Year

Dealing with debt is a pain. While we may have family and societal pressure to give expensive gifts, plan out your holidays to stay debt-free. Consider this a chance to prove that you do have the holiday budgeting skills needed to keep your bank accounts in the positive.

Limit your gift exchanges and focus on experiential gifts to save money. Take a friend to coffee or for a happy hour to focus on relationships over material possessions.

The Bottom Line on Holiday Budgeting

With appropriate planning and money-saving strategies, holiday budgeting doesn’t have to be complicated. You can stay within budget and create memories that will last a lifetime with your family and friends.

If you do break the bank this holiday season, take the steps necessary to get back on track. Then, be sure to start budgeting for next year ASAP so you never experience a holiday spending hangover again!

The Complete Beginner Guide to Holiday Budgeting

This post was originally published on March 10, 2018 and updated on December 8, 2023.

The Complete Beginner Guide To Holiday Budgeting
Scroll to Top