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How to prepare your Christmas budget

Let's guide you on how to build your Christmas budget and actually stick to it!

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In the honest words of Benjamin Franklin: “By failing to plan, you are preparing to fail." Don't let your finances go to ruin over Christmas - take the time now to build a budget and arm yourself with a plan to take into the holiday season.

Christmas is a time for giving, but it's also a time when many people overspend and end up using their credit card to buy gifts during Christmas time. To avoid this and stay within your budget, it's important to plan ahead and set a total budget for your holiday spending. This will give you plenty of time to save up for gifts, travel, and other expenses, and it will help you avoid overspending.

Build a budget in 4 simple steps

Much like a monthly budget, your Christmas budget is going to focus on the month ahead, balancing your income with expenses, with a little extra gift-giving thrown in. This is the toughest step - and best believe the most important one.

One way to save money and stay within your budget is to set aside a portion of each paycheck in a dedicated Christmas savings account. This will make it easier to save up for the holiday season and avoid using your credit card to buy gifts. You can also use gift guides and other resources to find affordable gift ideas, and start shopping early to take advantage of sales and discounts.

1. Determine your income

When creating a Christmas budget, it's important to include all sources of income you expect to receive this month. This includes your regular home pay, as well as any additional income from a side hustle, bonus, tax rebate, or other sources. By including the amount of each income stream in your budget, you'll have a clear picture of how much money you have available to spend on Christmas gifts, travel, and other holiday expenses.

If you're expecting any extra money this month, such as a bonus at work or extra income from a side hustle, be sure to include this in your budget as well. This can help you save more money for Christmas and avoid overspending. Consider buying only one gift for each person on your list, rather than buying multiple gifts. And remember, you should only be spending money that you own on Christmas gifts and expenses, rather than using credit or going into debt.

2. Write down all your expenses

From household expenses to utilities to car expenses to debt payoffs and money allocated to your savings funds. Also, be sure to include entertainment and transport, and don't forget the important things like insurance, child care and medical aid.

3. Create a special Christmas column

Added to your regular expenses, map out a budget for gifts, decor, and any food and drink-related expenses you will encounter. To make the task less daunting, start with which friends and family members you need to buy presents for and a rough estimate of what these might cost.

Also, consider things like stocking stuffers, the Christmas tree, sdecorations, and wrapping paper. Don't put too much pressure on yourself here, go for affordable over perfect and on credit, or better yet shop for a deal in the months before. The point of this budget is to reduce credit card debt, so use the time to come up with some great ideas before you go shopping. 

4. Minus your expenses from your income

With the expenses (including the Christmas expenses) and income column side by side, review your expenditure and ensure that the total amount in your income column can cover this.

  • if your expenditure is higher than your income make tweaks to bring it down. Consider buying a smaller gift for someone, or reducing your entertainment budget.
  • if your income is higher than your expenditure, great job. Now consider allocating those funds somewhere to avoid frivolous spending. Perhaps put more money in one of your savings accounts, or consider gifting some to a charity. Bear in mind that allocating these funds now before you're tempted to spend them will be preferable.

Manage your spending as you go

Check in every now and then to ensure that you're still in line with your spending and fund allocation. You don't need to become an accountant tracing every cent, just check in weekly for an overview of your expenditure and whether you need to make any adjustments.

Sticking to your christmas season budget will be the second hardest part - but not impossible! Print it out, put it on your fridge and be diligent about sticking to your budget. Your January wallet (and budget and bank repayments) will thank you.

Finding the perfect gift for your loved ones can be challenging, especially if you're on a tight budget. One way to save money on gifts is to shop sales and use coupons. Many stores offer special discounts and deals during the holiday season, so be sure to keep an eye out for these and take advantage of them. You can also use a sinking fund to save extra cash throughout the year for Christmas gifts, which can help you avoid going into debt when it comes time to do your holiday shopping.

Another way to save money during the gift-buying season is to give DIY gifts. These can be personal and heartfelt, and often cost less than store-bought items. Consider making yourself festive Christmas dinner, baked goods, hot cocoa, crafting a handmade gift, or giving an experience gift, such as tickets to a concert or a voucher for a spa day. These gifts can be thoughtful and unique, and they can help you save money on your holiday spending.

Getting prepared for next year

While you're doing most of the groundwork, why not duplicate this information now and implement it into next year's christmas budget already (meaning more expendable income for you in December)?

Establish your Christmas expenses

When creating your Christmas expenditure list, take into account any changes or new additions to your family or holiday plans. Start by making a list of all the Christmas presents you plan to buy, as well as any expected extra Christmas spending in your budget.

Don't forget to include Christmas presents for your kids and other family members. Also, consider in your holiday budget expenses such as travel, holiday meal, decorations (everyone loves some shiny christmas lights) , and entertaining. Add up the total cost of all these items to determine your total Christmas budget amount.

If you're using last year's budget as a starting point, be sure to make any necessary adjustments. The whole point of creating a budget is to ensure that you have enough money to cover all your expenses and avoid overspending during the holiday season. This will make your Christmas shopping experience stress-free and enjoyable. 

Work out monthly savings

Divide your Christmas expenses by 12 months and establish what you'll need to put aside each month to meet this goal. Consider creating a separate savings account (better yet one that has interest rewards) so that you have a safe space to put these funds out of reach.

Imagine the feeling of knowing all your festive season expenses are already saved. That might just be sweeter than Aunt Ruth's cranberry jelly.


Get prepared and enjoy this most wonderful time of the year

The festive season doesn’t need to be stressful, with a plan in place and a budget you’re ready to take on by the horns, your Christmas could be a lot cheerier, freeing up more time to enjoy the moments spent with the people you love. 

By following these steps, you can create a budget for Christmas that will help you save money and avoid overspending. And remember, it's not just about buying gifts - the holiday season is about spending time with loved ones and creating memories, not about going into debt. So, make a plan and stick to it, you won't feel guilty and you'll be well on your way to a happy, debt-free Christmas!


This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.


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