Two dogs and a cat sit in front of a Christmas tree, under a tartan blanket.

How to Create a Christmas Budget for a Credit-Free Holiday

As Christmas swiftly approaches, you’re probably already immersed in thoughts of holiday shopping. It’s known as “the most wonderful time of the year,” but let’s face it, it can also be a bit overwhelming, especially when juggling financial considerations.

However, it’s never too late to start planning! Dive into our tips on creating a holiday budget that allows for a credit-free Christmas. With some smart strategies, you can tackle your Christmas gift list with ease and joy, making your festive season both merry and financially stress-free. Let’s make this holiday season one to remember, for all the right reasons!

Also, check out this blogpost for 12 Best Tips to Spend Less at Christmas!

5 tips for a credit-free Christmas

Step 1: Assess your financial situation

Before you can narrow down your holiday budget, you must first assess your financial situation to understand just how much you’ve currently saved and how much you intend on saving from now until Christmas. This is also a good time to see how much you spent last year (and even the year before if possible) to pinpoint any areas that you can tweak, reduce, or maintain.

Step 2: Make your list and check it twice

Take this moment to make a complete list of all the people you intend to buy gifts for (family, friends, teachers, coworkers, etc.), what decorations you need to buy, a rough holiday meal plan, and anything else you can think of. Think back on years prior to see if you’re missing anyone or if there’s anyone you can remove from your list this year (like that friend you continually give gifts to but who never reciprocates). This is a strange year and it’s okay if you need to trim your list down to not go into holiday debt!

Step 3: Break your budget down

Now that you know where you plan on spending your money this year, it’s time to put a dollar amount to each category and break your budget down:

  • Gifts (break this down even further by allotting a dollar amount to each individual person)
  • Food
  • Decorations
  • Attire (although this one should be fairly simple as most company parties have been cancelled due to the pandemic, as well as large family and friend get togethers)
  • Donations
  • Miscellaneous

And for all you parents out there, financial blogger Perfection Hangover has a cool trick for figuring out how much to spend on each child. To make it fair for the older children (whose shopping lists inevitably become more expensive as they get older due to larger clothing sizes, more technology, etc.), she budgets a certain amount per child based on their age, rather than the same amount per child. Learn how she does this simple calculation.

Step 4: Do your research and plan ahead

To avoid overspending, take a few days to research your gifts at home before you hit the mall, local boutiques, or online stores. Plan ahead for upcoming sales (like Black Friday) when your items might be cheaper. Once you have your shopping list ready, schedule a day or two to get that shopping done. (Pro tip: Make sure to eat ahead of time to avoid shopping on an empty stomach and spending extra money at the food court.)

Step 5: Be honest

If the holidays have you feeling anxious or stressed more than usual, we encourage you to talk to someone you trust. Chances are, they’re feeling the same way as you! If gifts aren’t in your cards this year or you can’t afford hosting a big family dinner, you need to be honest with yourself and your loved ones. Explain where you’re at financially and have a conversation about ways you all can work together to lighten the holiday financial burden on your shoulders. There are lots of different ways you can save money during the holidays while still spreading that Christmas cheer!


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