How To Make and Stick to a Holiday Budget

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The holiday season is one of giving, which often means it can easily become the season of spending too.

To help take the stress out of the holiday season, consider creating and sticking to a holiday budget. Not only will a holiday spending plan help lessen your stress, but it will also keep you from overspending and potentially racking up debt this holiday season. Learn how to start budgeting for the holidays in order to make the most of it, and lessen the blow to your wallet.

Begin With a List of Holiday Expenses

To start saving ahead of the holidays, it helps to create a plan. Begin by making a list of all of your expected holiday expenses. Here is an example:

  • Gifts for friends and loved ones
  • Travel
  • Holiday food (spending outside your normal food budget)
  • Gift exchanges at work
  • Gift wrapping supplies
  • Shipping costs
  • Tips or gifts for service providers
  • Bonuses for employees, such as a nanny
  • Charitable donations

Making a list will give you a basic idea of things that you will need to pay for and easier to prioritize if you have to limit your spending this year.


In addition to listing out your expenses, create a detailed shopping list. For each individual you are gifting, you should have one or two ideas within a designated price range. This will help you to do proper research and find the best deals on items, as well as pick a present that your recipient will truly appreciate.

Decide on Your Spending Limit

Now that you know where your money is going, determine how much you have available to cover holiday expenses this year. It's important to take a hard look at your budget and decide how much money you have leftover to spend during the gift-giving season.

When you are considering this amount, be sure that you only use money that you have set aside or extra money that you can find in your budget. It's important to not plan on spending more than you have saved initially with a plan to pay it off later.

When holiday shopping, you may want to stick to a cash-only system. Putting the gifts on a credit card makes it easier to overspend. Credit cards almost always have double-digit interest rates, and a $1,000 charge to a credit card for holiday gifts paid back at the minimum payment could end up costing you $1,800 or more.


Consider speaking with family members and close friends about a predetermined spending limit ahead of the holiday season. This is especially great for those doing gift exchanges. A price limit can help you, as well as others, stay within their means.

Assign Money to Each Category 

Divide your budget according to the different spending categories you'll have this holiday season.

This means assigning a specific amount for each gift, as well as each outing, office holiday party, or another event. If you're traveling to your grandma's in Florida, for example, the travel there and the gift you purchased for grandma would be two separate categories. Knowing how much you have to spend on each gift will help you narrow down ideas before you shop.

Track Your Purchases

Once you begin the holiday season, keep track of all your purchases. Bring your gift list, along with your budget sheet, with you on every shopping trip. Additionally, be sure to keep track of the cost of your holiday-related outings and other spends so you will be able to more accurately budget next year.

As you begin to purchase gifts and spend money, be sure to subtract the amount from your running Christmas budget total. This will let you know how well you are sticking to your budget and will make it easier to make adjustments between categories if needed. Tracking your spending is the biggest key to sticking to your budget. 

Other Tips for Saving Money During the Holidays

How you spend and save for the holiday season will depend on the individual. But if you make a plan ahead of time, you can reduce the financial impact of the holidays.

Below, find a few other ways to cut back on spending during the holiday season.

  • Take advantage of Black Friday and Cyber Monday sales. The pre-holiday sales that many retailers offer are a great way to get ahead on your shopping and save some funds. Reviewing your list and the sales ahead of time can help you maximize your savings.
  • Do most of your shopping online. Shopping online can save you money and time, as it gives you the ability to comparison shop to find the best price. Don’t forget to look for free shipping codes and allow plenty of time for your gifts to arrive.
  • Make DIY presents for those closest to you. For those creatives out there, homemade holiday presents are a great way to save money, and show the gift recipient how much you care about them.
  • Gift experiences rather than physical items. While physical presents are great, sometimes experiences can be more worthwhile. Instead of getting an at-home cooking set for your daughter who wants to be a chef, for example, consider purchasing cooking lessons for the two of you to do together. That way, she gets real-life practice and you two get some quality time.
  • Start saving early. If you put aside money each month to cover your holiday expenses at the very start of the year, you will stress a lot less about your holiday spending when the time comes. Consult last year's budget to see how much you spent, then divide that number by 12. This is about how much you need to put aside each month in order to cover the next year's holiday spending. Keep in mind that costs tend to rise year-over-year.
  • Keep your budget realistic. It can be challenging to manage the pressure and desire to give holiday gifts, leaving many people to make tough choices over what to cut in order to give. It may feel heartbreaking to skip gifts or give much less than you would like to, it is likely to be much less burdensome than taking on debt or cutting spend on necessities.
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  1. Federal Reserve Bank of St. Louis. "Holiday Shopping: Should You Expect to See Inflation?"

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