It’s Never Too Early (or Too Late) to Budget for Christmas

Budgeting for Christmas sounds like a problem for future you, but that’s not really true. It’s never too early (or too late!) to budget for Christmas so that you can save money, and enjoy the holiday season and holiday spending without the stress.

It seems like common sense. Why suffer through financial stress at the holidays when there’s an easy way to avoid it?

My 23-year old son and I were discussing this concept recently. He had attended a smart money seminar at church where the speaker joked about the one expense people know is on the calendar every single year. 

December 25.

Why are people surprised when the Christmas season and its expenses roll around? It’s the exact same day every year!

We know it’s coming, and yet the cost of gift exchanges and green bean casseroles seems to sink us every year. Let’s be different this year!

Why Start Budgeting for Christmas

When Bryan and I first started getting our finances in order, Christmas was a sticky spot for me. Don’t get me wrong. I absolutely LOVE to celebrate the holiday and give gifts and throw parties and bake goodies!

But back in 2009, we were actively trying to build our emergency fund so it felt weird to be spending extra money for Christmas, money that could have gone to savings. The mom guilt was off the charts.

A wise friend suggested that I start earmarking money specifically for Christmas. Huh?

Something so simple had really not occurred to me, at least not in a practical way. That year we started our first sinking fund, a practice that has helped us to live debt-free and still account for the occasional big expense.

By budgeting for Christmas, making space in our spending to indulge in the fun and frivolity of the holidays, I gave myself permission to enjoy it, albeit in a frugal way.

I’m sure each of us has different burdens to bear when it comes to Christmas spending. 

Maybe times are tough, and you are barely making ends meet during a regular month – forget about having extra at the holidays. 

Perhaps you compare the abundance your family enjoys with the lack in other people’s lives and you have a hard time buying more. 

Or maybe you have no qualms whatsoever about spending, spending, spending, regardless of whose money it is — until the January bills start rolling in.

Make this Year Different with a Christmas Budget

This year, let’s be purposeful in our Christmas spending. Let’ s not deal with guilt, panic, or a scary January bill. Give yourself permission to spend freely.

But, how? The year is half over already. It’s already too late.

Too late? You’re still gonna spend money at the holidays, aren’t you? Well, plan for it today. Save for it. Budget for it.

It’s never to early to start budgeting for Christmas!

How to Make a Christmas Budget

Luckily, it’s not hard to make a Christmas budget. And it’s also not too late.

While it would be ideal to be saving all year long for the holidays, there’s no better time than the present. So let’s do this thing.

1. Make a list of expenses.

Generate a list of all the extras you anticipate coming up in the next few months. This could be family gifts, friend gifts, new clothes, Christmas cards, decorations, special Christmas activities, etc.

Usually our December celebrations follow a certain pattern. We can look back and see what we did, where we went, what we spent and then plan for it next time by setting aside a portion of that money now. 

If you don’t keep a lot of records, scroll through your calendar, camera roll, and bank statements from last November and December. You can likely recreate some expected expenses.

What do you usually spend money on during the Christmas season?

2. Check your list again.

Go through your list and prioritize the different expenses you foresee this holiday season. What’s really important and what’s a nice-to-have-but-not-necessary-to-life?

Chances are you may have to cut something. The cost of things have gotten crazy in recent years. Few of us can manage to do everything we want to do all the time. Be willing to cut some things that aren’t that important.

For instance, I stopped sending Christmas cards years ago and am pleased to report that I’m less stressed and $200 richer every year. While we loved the novelty of making a Beef Wellington last Christmas, it probably won’t make the cut in future.

Prioritize and make room for the most important things for YOU.

3. Decide on an amount to budget.

Once you know what’s on the horizon, you should be able to estimate how much those things will cost. Look at past years to give you ballpark numbers. 

The last few years I’ve spent about $1300 for presents, decor, and extra expenses particularly for holiday celebrations, so that’s what I currently budget. This works out to socking away $108.33 every month in a special savings bucket.

Pro tip –> I use an Ally savings account for this where I can earmark money for special sinking funds. I also get real interest because Ally bank is a high-yield online bank. When you open an account through my link, you may receive a cash reward up to $100!

Again, you may need to prioritize. Often times when we add things up, we realize that our original ideas just aren’t realistic. Or this year may be a harder year financially. Figure out how to get yourself some wiggle room.

Don’t worry. There are lots of ways to save on Christmas expenses. You may be able to have your Christmas cake and eat it, too.

4. Determine where that money will come from.

Unfortunately, those aren’t money trees they sell in the parking lot of Lowe’s at the holidays. You’ll have to find the extra cash, outside of your regular household budget, to pay for Christmas spending.

If you don’t already have a surplus each month or a dedicated Christmas savings account, this may mean foregoing some other monthly expenses or taking money from savings.

Consider these ways to free up extra funds for the holidays:

• Do a pantry challenge. What you save on food costs can go toward paying for the holidays. Shop your kitchen one week out of each month to carve out some extra from your grocery budget.
• Sell unused items. Whether at a garage sale or on eBay, you can often scare up some extra cash by selling items in good shape that you no longer use. Send this money directly to your Christmas stash.
• Get a side job. A side hustle over the next couple months could generate a fair amount of cash. Get creative and think outside the box. There are so many remote online jobs to be had! What service can you provide that others would pay for? This list can give you some good ideas.
• Find areas where you can cut costs. Chances are you do things that aren’t essential at the holidays. You may like them, but they may not be absolutely necessary. Maybe you are a stickler for sending Christmas cards, but don’t mind skipping the lights this year.
• Adjust your expectations. Have a chat with your family to determine what really matters to them at the holidays. I send my family a google survey each fall and I’m always surprised that what I thought was important really isnt. You may find many ways to save money in adjusting your expectations and theirs.
• Remember the WHY. Jesus doesn’t measure you by the decorations on your tree or the feast on your table. So why should you?

I created a Holiday Budget Worksheet as well as a Sinking Funds tracker to help you (and me!) plan for the holidays and its associated costs. It’s free when you subscribe to my email list.

Drop your email address below and I’ll send you instant access to the Life as Mom resource library. There are tons of goodies to make your life as Mom a little easier.

Don’t Be Naughty; Be Nice to Yourself

If you cheat and overspend, remember that you hurt no one but yourself. Don’t go into debt over some dumb toy that your kid will have forgotten about three months — or three days — later.

Living within your means is actually very freeing. You will enjoy the holidays so much more, knowing that you won’t still be paying for it next year.

Do yourself a favor and focus on experiences rather than stuff. You’ll all be better off. 

And so will your bank account.

Do Now: Budgeting for Christmas

If you have a list of budget items and a set amount of money to spend, your purpose will be clear: don’t spend more than X amount of money.

Not only will you avoid overspending, but you’ll learn to enjoy what you have all the more. 

More Good Ideas for Christmas

Originally published in 2013, this post has been updated for content and clarity.