Budgeting for the Holidays (without being a Scrooge)

Christmas is a wonderful time of year, but it’s also filled with a lot of stress and worry over how to afford “The Perfect Christmas”.

Christmas is my favorite time of year. At the risk of offending any Thanksgiving purists out there, I’ll admit I start decorating for Christmas around the beginning of November. This year, my Christmas tree was up and decorated the week before Thanksgiving. I love the decorations, the music, and the general holiday cheer. 

But the holidays can also come with a pretty big price tag. It’s expected that you buy Christmas presents for just about everyone you know: immediate family, children in the extended family, close friends and neighbors, your kid’s teacher, and perhaps even your coworkers. Without even trying, you’ve suddenly racked up hundreds, if not thousands, of dollars in gifts. It’s easy to find oneself in credit card debt just trying to keep up with the pressures of the holidays. 

I love a good gift as much as anyone, but there’s no reason why we need to spend more money during the Christmas season than any other time of year. In this guide, I’m going to give you some ideas for how to give gifts, plan activities and create some holiday cheer, all while keeping in your budget. 

Saving up

First of all, it’s always a good idea to set aside some money every month for miscellaneous items. If you know you’re going to be spending extra money on gifts in December, then it’s a good idea to set some money aside beforehand. If you plan on spending a couple hundred dollars on Christmas gifts, set aside $40-50 per month and by the time December rolls around, you’ll have about $500 for gifts. Be proactive so December doesn’t sneak up on you. No credit card debt for you this season! 

The Christmas Guilt 

Next, I want you to take a hard look at why you are buying gifts. I’m so tired of hearing people say things like “I feel like a bad parent if I don’t get my kid a gift”. Do you know why you feel that way? Because we live in a capitalist society and advertisers are trying to push ideas into our heads that love comes with gifts.

Advertisers have brainwashed us into thinking that love = gifts

Now, I know I’m speaking from a place of privilege to say that I always received a Christmas gift. Usually three or four. A handful of those gifts stand out over the years: some toys that I really loved or a new cell phone (back when they cost $100, not $1,000). But what I remember most about the holidays is a feeling. I remember my mom making lots of Christmas cookies, and sitting in the kitchen helping her decorate them. I remember the paper snowflakes hanging in our kitchen, and the snowman lights in the window. I remember pulling out my box of ornaments and finding the perfect spot for each of them on the tree. 

Nearly every gift you buy your loved ones this year will eventually be forgotten. So rather than trying to buy your loved ones everything on their Christmas lists, think about ways that you can create holiday traditions. If you were going to spend $50 on a gift for your nephew, try using that $50 to take him to a light show. Stuff may get lost or forgotten, but those memories will be cherished year after year. It will definitely be money well spent. 

Creating a Holiday Season

As I’ve gotten older, I’ve realized that what I love most about the holidays is that it’s a season. I love the feeling of joy that comes with the entire month of December. To me, a single day of giving and receiving gifts isn’t sufficient to make the holidays feel full. I need a long list of holiday activities to feel like I have fully celebrated. Rather than focusing on the list of gifts you are going to give or receive on Christmas Day, think about ways that you could celebrate before December 25th. There are tons of free or cheap holiday activities you can do in December.

You don’t need to spend a lot of money to plan fun holiday activities.

In my article, Cheap, Fun Activities with Friends, I suggested playing a tourist in your home town. Imagine you are a tourist now, visiting your city for the holidays. How would you spend your time? What Christmas events would you attend? 

Since I live near Washington, D.C., I love going to see the Christmas tree on The Ellipse in front of the White House. It’s also fun to just walk around the city and see all of the Christmas trees and decorations. 

One day every December, my husband and I take a day off of work and go downtown to go ice skating in the Sculpture Garden, next to the National Gallery of Art. It costs about $40 for us to ice skate for 2 hours and get hot chocolate afterwards, but it’s one of my favorite holiday activities and something that I look forward to every December. 

So rather than focusing your time and energy on what gift you are going to give someone (who, let’s admit it, is going to break/forget/lose/outgrow that gift at some point), think about what kinds of activities or traditions you could create with them.   

The Present

While I don’t believe in buying a gift for everyone, I understand there’s a lot of pressure to buy presents during the holidays. So if buying a present is unavoidable, here are my suggestions for gift-giving on a budget. 

1. Create a gift budget. Give yourself a specific amount of money for presents for: immediate family, extended family, friends, and others. Then stick to your budget. 

2. Buy one gift. You don’t need to buy an armful of gifts for every person. Buy your loved ones one gift and allow them to fully appreciate the item that you’ve given them. If there are multiple kids in the family, you absolutely do not need to give every child a gift. Try a gift basket for the whole family and fill it with movies, candies, coloring books and dollar store trinkets. If you wrap every item inside a big box, they’ll have just as much fun opening it and playing together. 

3. Keep the spirit of Christmas alive all year. At some point, you’ll be shopping and find something great that will be the perfect present for your loved one. Maybe the item you’re looking for will go on sale (which it almost certainly won’t do during December when everyone else is shopping too). Keep an eye out for gifts and sales throughout the year, and put the present in the back of your closet until December 25th. Spreading out the costs throughout the year will also prevent you from getting hit with a huge December credit card bill. 

4. Browse local pages online. In my post, Furnishing a New Home on a Budget I talked about using Buy Nothing groups, Freecycle, and other online pages to find furniture and other household products for my new home. There are tons of free items that you can give as gifts. I’ve seen new make-up products, dog toys, kitchen appliances, roller blades, paintings, clothes, live plants and so much more posted for free. 

Action Items

1. Create a present budget. Decide how much money you are willing to spend on presents, then stick to your budget. 

2. Shop all year. Keep an eye out for gifts when you’re shopping. You’ll definitely find a better gift than you would shopping last minute the day before Christmas.  

3. Create a holiday tradition. Whether it’s with your kids, family members, friends or just by yourself, choose an activity to make your annual holiday tradition. Maybe it’s ice skating with friends, taking your kids to see Santa at a local event, or putting on your favorite Christmas movie and opening a bottle of wine. Whatever it is, make an effort to put it on the calendar every year so you have something to look forward to.

Your life may not be perfect, but it is imperfectly yours. The only way to live it is your way.