Christmas Shopping on a Budget (A Debt-Free Holiday)

Christmas shopping can be a stressful thing for a lot of people. What is meant to be a joyous and happy time of year can cause lots of financial stress for many. Being people who often take time to discuss even a $25 dollar purchase, we get it!! That’s why Cody and I have two big strategies that we utilize to keep us on-budget and stress-free.

Method 1 – A sinking fund

We save up all year for Christmas. According to Statista, the average family will spend $906 on Christmas gifts alone this year. We don’t spend quite that amount, but coming up with roughly $1000 every December (or more likely, having to put in on credit cards that will have to be paid off later) is a lot more stressful than saving roughly $75 each month throughout the year. We have online banking, so we set up an account and each month we set aside money to go into the Christmas account. That way when we get to December, the money is already there!

Method 2 – Set a budget

Set a plan before you shop. Make a list of all the people and occasions you will need gifts for. I often do this right around Thanksgiving. I always pull up my calendar during this time as well to remind me of other gatherings that may require a gift.

Things to keep in mind:

  • Family members you buy gifts for
  • Friends you exchange gifts with
  • Miscellaneous Holiday Giving – do you have a tradition of buying food for the food shelter each year? Consider adding this to your list.
  • Hostess gifts. Does your neighbor host a holiday party for the neighborhood each year? Don’t forget to include a gift for the host!
  • Other gift exchanges/secret santas
  • Other annual holiday giving. Many schools and workplaces have a giving tree or annual fundraiser around this time. If this is something you participate in, put it on the list.

Now, you know my love for spreadsheets, so of course our list in a spreadsheet! In the next column I go through and estimate how much to spend on each person. Perhaps closer family members get a few more gifts than Great Aunt Matilida who you only see once a year. I assign target dollar amounts here; it felt weird the first time, almost as if I were assigning some family members and friends to be worth more to me than others. But hey, it’s not like they will ever see your budget!

Total up your list.  If it’s within your saved amount – AMAZING. If not, you need to decide to either cut back on gifts here or there or see if you can pull money from elsewhere in your budget. It can be tempting to keep spending, because giving can be so fun, but the goal is to have a debt free holiday!

Combining Methods

Here in the Osegard house, we use both methods. We save up throughout the year and never go shopping without a solid game plan. The goal is to never go into debt for Christmas, and these methods make sure we are free to gift and give for the holidays guilt-free and debt-free!