If you’re in debt, then chances are good that you haven’t been saving all year for Christmas. Here's what you can do.

It’s the time of the year when budget-minded people start thinking about how their finances will accommodate the extra expenses of the holiday season.

Actually, the really budget-minded people have been preparing financially for the Christmas season all year long.  Divided over twelve months, the holiday expenses are barely noticeable.

If you’re in debt, then chances are good that you haven’t been saving all year for Christmas.

In fact, if you have debt, you might be tempted to say, “What’s a little more debt?” when it comes to holiday spending. Don’t do this!  Don’t lose momentum in your debt payoff and definitely don’t go deeper into debt in the name of the holidays!

This is why you need to think ahead and budget for Christmas now.

What holiday expenses do you anticipate?

Think through past Christmases and write down what you plan to spend money on.  Here are some common categories to help spark your memory.

  • Cards— Include price of cards and postage
  • Travel— Include all expenses of your trips
  • Gifts— Who are you planning to give to?  Immediate family, extended family, neighbors, teachers, friends, co-workers?  Include:
    • Stocking stuffers
    • Wrapping supplies
    • Shipping
  • Treats— For your family and to share
  • Meals— Are you hosting a meal or attending a holiday potluck?
  • Decorations— Do you buy a live tree?
  • Charitable Giving— Holiday-related giving
  • Other— Does your family have another tradition that involves an expense?

For gifts, I recommend writing out an inclusive list of everyone you plan to give gifts to, whether they are large or small expenses.  Even though this is an expenses list, I would still write down people who I’ll be giving handmade gifts to.  Then you can happily put a big $0 next to those.

Prioritize your list

Once you have your list, start prioritizing it.  You probably won’t have the time or money to do everything on your list, but there will be some items that are more important than other things.

For example, it would be nice to give a hostess gift to Great Aunt Mildred, but if push comes to shove, you’d probably rather get your daughter a doll and some new pajamas. Or, while it would be nice to bring treat plates to all of your neighbors, it’s more important to pay for gas to get to grandma’s house for the family dinner.

I like to prioritize in three tiers.

The “gotta” expenses are the bare essentials.  They include the gifts, decorations, or food that is most important to me and my family.

The “wanna” expenses are not absolutely essential for a happy holiday, but they are pretty standard for our family and we would really like to do them.

The “would be nice” expenses are ones we’d enjoy if we had the time and money, but are really just extra.

Even though it would be nice to do everything on your list, both time and money will pose limitations. How you prioritize is completely personal. By prioritizing your list now, you’ll make sure that the most important traditions are included before you spend money on things that don’t matter much.

How much will you have available spend?

If you have been budgeting and tracking your expenses for more than a year, it’s easy to go back and look at previous years to see what you’ve spent. But what if you’re new to budget and tracking expenses?  That’s when it gets tricky, but that’s when the need is the greatest!

If you haven’t budgeted (or kept track of expenses) for Christmas in the past, then you probably don’t have any idea how much you actually spend on the holidays.  In fact, you would probably be pretty shocked to see how all those little (and big) purchases added up.

Instead of choosing an arbitrary number or even an amount that you think you’ll need, look at what you have available to spend.  Maybe right now you have $0 in your Christmas fund.  There’s no better time to start saving than now (well, besides yesterday, but we won’t dwell on that).

In the weeks before Christmas, you can add to your Christmas Fund by cutting costs and earning extra.

What costs can you cut between now and Christmas to contribute to your Christmas fund?

Here are a few ideas:

What can you do to earn some extra income between now and Christmas?

  • Sell stuff that you don’t need or have sitting around.  This is a great season to put the toys your child has outgrown on Craigslist, Facebook, or Ebay.  Not only are you decluttering, and earning extra income for your Christmas fund, you’re helping out other parents who are looking for cheaper-than-new gifts for their children.
  • Sell your specialty.  Do you make great pies or rolls?  Maybe you make cute hair bows or personalized ornaments.  Try selling on a local Facebook group or to friends and neighbors.
  • You could offer babysitting for friends who would want to go Christmas shopping together without their children.  Set a block of time on a Saturday and offer your services to several families.  With lots of kids, they’ll have fun playing together, making it easier on you too!
  • Do you have a job that offers overtime?  Could you pick up an extra shift?
  • Here are some more ideas for earning extra money that you can get paid for quickly.


Accept that it’s okay to simplify.  It’s okay if this Christmas looks different than in years past.

Decide that your financial goals like getting (or staying) out of debt are more important than giving expensive gifts and having the perfect table spread.

Realize that those who love you would rather have you get closer to financial peace than have a costly gift from you.  There is nothing more awkward than getting an expensive gift from someone who you know can’t afford it.

How About You?

I’m excited to hear your ideas and experience in managing your holiday budget!

  • Do you start saving early for Christmas?
  • How do you decide on and prioritize your Christmas budget?
  • Has debt affected your Christmas budget?

This post was originally published 19 October 2015, but has been updated to be included in the Frugal Festivities series.

When finances are tight, budgeting for Christmas can be tough. Here are some practical ways to work out your Christmas budget when you're in debt to avoid throwing off your payoff plan or going further into debt.



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