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Does the thought of shopping for Christmas fill you with financial stress and anxiety? It really does not have to be that way! Start where you are and make a plan to put Christmas on a budget this year! In this post, I’ll walk you through 6 ways to make shopping for Christmas fit your budget.

Getting into the holiday spirit

I don’t know if it’s because I was born in December or what, but I LOVE the holidays. Some people are Halloween people…I’m a Christmas person.

I love

the smell of cold, ready-to-snow air,

twinkling lights in the window,

glistening snow,

warm fires and cups of hot cider,

snuggling up with loved ones wearing cozy pajamas, drinking wine out of a mug, and laughing loudly.

Maybe it’s because we tend to have more time off for the holidays, but I love the togetherness of the holidays!

It’s also such a treat to be able to give generously to our family members and friends this time of year. It’s a time to feel thankful and show our gratitude and love towards others.

Just writing this gave me the warm fuzzies! Sorry, not sorry.

But, I will say there is one part of the holidays that stresses people out…the COST.

It’s not just the family gifts, but also the meals, potlucks, decorations, cookie exchanges, travel expenses, ugly sweater contests, Secret Santas, white elephants, etc…

The holidays are EXPENSIVE!

Average Christmas Spending Amounts

According to LendEDU, the average American spent $668 on Christmas in 2019.

The National Retail Federation anticipated about $1,050 per person for 2019 with a nifty breakdown of per-state amounts.

These figures don’t even include Thanksgiving expenses ($186.05 per person in 2019) or New Year’s celebrations. From the end of November through the end of December, it often feels like we are spending CONSTANTLY!

christmas on a budget pin

Why You Need to Put Christmas on a Budget

Although some people can fit an extra $1,000 into their budget without a plan…that’s the exception, not the rule.

Many Americans take on debt to pay for their holiday spending. LendEDU predicts that 20% of shoppers will take on an average of $720 in debt!

After working as a credit counselor, I heard people share their challenges with credit card debt day after day. I know that any extra expenses can cause a domino effect down the line. Although I do use credit cards, I never buy anything I cannot pay off in full at the end of the month. I am very fortunate to be in a financial situation where this is possible, and I know that’s not the case for everyone right now! However, this is the most sustainable and safest way to use credit in the long run.

By putting Christmas on a budget, you can avoid dealing with any potential late fees or recurring debt AND you can ensure that January won’t be a penny pinching month!

Learn how to save money on groceries using my pantry staples list!

How Much to Spend on Christmas Gifts

This is a tough one because it really depends on your income and expenses, where you are in life (kids, grandkids, married, single, etc), your values, your holiday preferences, your family’s traditions, your workplace traditions, etc.

Personally, I LOVE homemade gifts, supporting local businesses, and gifting experiences. That still adds up, though!

Generally, I like to come up with a specific amount per individual based on their position in my family. Etiquette expert Jacqueline Whitmore recommends these amounts for Christmas spending:

  • Acquaintances, coworkers and casual friends: $10-$20
  • Close friends, siblings or other family members: $30-$75
  • Significant other: $75+ 

Those fit pretty closely for me. Since we have been working on buying a house and paying off debt, we’ve been spending on the lower end of each. However, in my family, the nieces/nephews do not give gifts to aunts, uncles, or cousins unless they are especially close.

Know any gardeners? Here are 14 gifts they’ll LOVE! You can even build some!

Figuring Out How Much to Save for the Holidays

Although many of us spend different amounts on the holidays, I’m going to work with a figure of $1,000. That amounts to a monthly savings goal of $83.33.

First, I want you to decide your deadline for your holiday budget. If you want to have all of your Christmas money ready to spend by the end of November, then that’s your deadline.

Why November? If all of your Christmas budget is 100% ready to go by the end of November, you’ll be able to shop from it through December. It’ll also be ready for Thanksgiving expenses or holiday parties that may come up early in December.

Many of us pay for Christmas expenses straight through December so you can also set December as your deadline! You just probably won’t transfer that final savings amount to your savings account since you’ll need those funds to pay for the items you’re purchasing at the time.

How to calculate your monthly savings amount

To calculate how much to save per month, simply divide the number you want to save up by the number of months remaining.

The earlier you start to save, the less you’ll need to save per month. The best time to start saving though? Right now. We can’t go back in time, so if you’re starting to save later in the year, that’s still better than trying to pay for everything out of pocket!

Total savings amount / number of months to save = monthly amount

Let’s say it’s September and you need that $1,000 by December.

In September, you’ll be able to contribute towards this $1,000 for four months: September, October, November, and December.

$1,000 divided by 4 equals $250.

This means that each of these four months, you’ll need to save $250 to reach your savings goal.

Tip: Instead of making a holiday budget, make a year-long gift budget! Use all of the same methods below, but increase your savings amount to cover birthdays, graduations, special occasions, and more. Those expenses won’t tank your monthly budget when they come up!

Christmas on a Budget: 6 Easy Ways to Save for the Holidays

I recommend that you pick one of the first two systems for your primary savings method. Then, turbocharge your savings using the remaining strategies! Putting Christmas on a budget is way easier when you can grow your savings with interest or automate it with regular transfers!

1. Set up automatic transfers to a dedicated holiday savings or checking account

Every bank or credit card I’ve ever used allows you to set up automatic transfers on specific days of the month. You can align these with your paydays to send your money to a dedicated savings or checking account created only for holiday spending.

If you save your holiday money in a savings account, you’ll need to transfer it to checking or use it to pay off credit card balances. If you save your money to a checking account, you can even have a debit card only for holiday spending!


  • Automated
  • Never have to think about it
  • The money will always be on hand
  • May accrue some interest income on the saved amount
  • System will continue indefinitely until you stop it


  • Harder to automate if you have irregular income
  • You will not have the full amount you need saved up until your final savings transfer of the year, which means you may not be able to cover 100% of your holiday expenses until that final amount is saved in December.

Solution: You can set your savings date deadline for November so that starting in December, every penny saved goes towards the next year’s holidays.

Consider Using a High-Yield Savings Account like Ally

If you save with a company like Ally, you’ll grow your holiday funds even faster as they offer high yield checking and savings account. I’m NOT an affiliate of Ally – just an enthusiastic customer! Although the rates dropped from 2% to 0.8% Annual Percentage Yield in 2020, that is still an additional $8 per year for every $1,000 in your account.

Ally also offers savings “buckets,” so you can automate your saving just like with any other bank, but direct your holiday saving amount into the holiday “bucket.” This means that because all of your money is still being saved in the same account, you earn interest off everything in your savings account and not just the smaller holiday account!

They also offer rounding up (see #3 below) and “surprise savings,” so you can maximize your savings!

2. Use an envelope-method system (but digitally!)

The envelope method is a zero-based budgeting tactic where you set specific spending amounts for each monthly expense and put those amounts in cash in actual physical envelopes.

I’m a big believer in the zero-based budgeting method where every penny of your money has a job! I’m not as big of a believer in carrying around envelopes of cash. This works for lots of people and studies show that we overspend by at least 12-18% every time we swipe a card to pay!

I always tell my husband I am way stingier paying with cash than with a card; I don’t like my money going away!

However, the thought of juggling a bunch of envelopes and paper just does not work for me. Instead, I like to do my discretionary spending through Simple. Like with Ally, I am not an affiliate of Simple, just a customer who really likes their interface.

Digital option for the envelope method

Simple is an online-only bank that is partnered by BBVA and insured by the FDIC. It only offers a checking account and you cannot overspend beyond your balance.

You set goals for spending categories which you can fund all at once, a little bit everyday, or a set amount per paycheck. There are many ways to customize how you get your money into your goal so there is an option that works for you!

Categorize spending in goals

My favorite part of Simple is that after you make a purchase with your debit card, you simply categorize the spending using their mobile app or website. So, if I made a purchase at Target for $50, I can decide which of my savings goals to assign that purchase, like groceries, clothing, or holiday spending. Plus, if you overspend in one area, you can transfer money from another one to cover the difference. You can even have a shared account so your partner can pick up groceries and have it all organized in one place!

This is the easiest way for me to manage discretionary spending each month as it’s just one card and one app. When I get paid, I transfer the amount for my monthly discretionary spending (groceries, clothing, holiday, pet, car, etc) to Simple and send that money to my individual goals. As I shop, I assign each purchase to each goal. If I do not spend all of the money in that goal for the month, it will stay in the account and continue to grow!

If your goal is not a regular expense like groceries, it will be even easier to watch that balance grow! When you are ready to shop for the holidays, whatever you have saved will already be waiting for you. Super easy!

You can also track categorized spending with apps like EveryDollar, but I find that Simple is the easiest solution for me.


  • Super easy to automate & customize automations
  • Create custom goals
  • Track all discretionary spending in one place
  • Great for long and short-term goals
  • Very friendly and responsive customer service
  • Can have a shared account to streamline family spending
  • Offers rounding up boosters to maximize savings


  • May take a little time to learn how to set goals, manage automatic savings, etc
  • Regular savings APY is low at 0.01% and you can only have one Protected Goal at 1%

Solution: Move all discretionary spending to Simple to save for big goals and track monthly budget categories, like groceries and clothing.

Supplemental Holiday Savings Strategies

Again, I recommend that everyone pick one of first two strategies as they will guarantee you meet your savings goal. These remaining strategies will help you reach that goal faster!

3. Use rounding up boosters to save more

Many banks, like Simple and Ally, offer services that will round up the difference between what you spent and the next dollar and put that money in a select account. These are like micro-transfers. If you buy coffee for $3.52, your bank will automatically send the additional $0.48 to your savings account. Although these are small amounts, they can add up!

I would not use this to cover all of my holiday spending, but you could use this strategy to maximize your saving in any budget category (emergency fund, holidays, car repairs, etc).

4. Save up credit card rewards points

Some budget bloggers do not believe in credit cards at all. Personally, I think credit cards are a valuable tool I can use in my favor if I use them responsibly. I never use credit cards with an annual fee and try to do all of my banking with credit unions or smaller banks for lower interest rates. More importantly, I ONLY use my credit card to cover purchases I could make with cash. I do this for convenience – I can track all of my monthly spending in one place if I shop exclusively with a credit card – and for cash rewards.

I’m from a military family, so I have my main credit card through Navy Federal Credit Union. I have the Cash Rewards credit card, which means I earn at least 1.5% cash back on every purchase. The cash back grows every month and I can have the money transferred to my account or use it to pay off my credit card. So far this year, we’ve earned close to $300 in cash back in about 7 months. Although we are still saving for the holidays separately, I know that I can focus on saving a little bit less and offsetting the amount with my cash rewards.

5. Earn rewards while shopping in-store and online

Although my credit card offers a cash reward, I can get rewarded twice if I use a program like Rakuten for my online shopping and pay with my cash rewards credit card. Rakuten, formerly ebates, offers a specific percentage back on your purchase if you shop at specific stores. You can redeem your cashback 4 times a year as a digital transfer via PayPal, a printed and mailed check, or you can convert your cashback into gift cards for even more money.

If you shop with my referral code, new users will get an extra $30 bonus on your first purchase of $30 or more!

The cash back offers they have cover a wide range of stores and there are often promotional days when the cash back is 10% or higher! I recommend going through a service like Rakuten for your online holiday shopping (they offer in-store cash back, too) and adding your cash back bonus to your holiday account. Just remember not to spend more to get the bonus. Only buy what you need!

If you get your bonus through check, you can deposit it directly to your holiday savings account! Of course, this will not cover all of your holiday savings, but again, this is a way to increase your savings. Every bit helps!

6. Save up any bonus money

Think about tax returns, bonuses, birthday gifts, and even the bonuses I mentioned above! I love to fully fund a savings goal in one fell swoop when I can because then I’m not tying up my monthly budget.

For example, if I am trying to save $1,000 in a year for holiday spending, I need to set up a transfer of $83.33 each month into my account. That means that of all the money I have available to spend after my mortgage and other expenses, I’m tying up an additional $83.33 per month to plan for future spending. That’s totally fine, but if I can fund part of that balance in one lump sum, I can either save less per month or save for a shorter period of time. I’m still saving the same amount in total, but now I can send that monthly $83.33 to pay down my student loans faster or to save up for a future farm!

All wrapped up with a pretty bow — here’s how to plan for Christmas on a budget!

  • Set a goal and a deadline.
  • Make a special holiday account or a goal if your bank allows you to set goals within accounts.
  • Save a set amount each month.
  • Use rounding up boosters to maximize your savings.
  • Apply credit card rewards.
  • Earn extra cashback using Rakuten.
  • Save up extra money & make extra payments.

Can you help us out? What are the traditional spending patterns in your family? Do cousins give each other gifts? Are there major differences in how much people spend? Let’s talk about it below!

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  1. Pinned this post, because I relate to your practical ideas Rachel. Visiting from ABUNDANCE AND GRATITUDE AT THE HEARTH AND SOUL LINK PARTY, where I shared Fabulous Fall Foliage Colors and Colorful Autumn Trees. Happy Autumn and stay safe and well.  

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