Budgeting For Christmas

Budget Tips for Christmas & How Much to Spend on Gifts

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Creating a budget for Christmas and understanding how much to spend on gifts will help you avoid holiday debt hangover in January.


I used to think of myself as the greatest Santa Claus ever. I spared no expense when it came to gift-giving during Christmas.

In high school, I gave my girlfriend a brand new rabbit fur coat. Back then fur coats were still the rave. It seemed like the right gift at the time. Giving made me feel good like I was doing something special. And she looked great in it. Although I am not sure how she felt about wearing a coat made of departed rabbits.

My nieces and nephews always received the best gifts. Cool, yet practical toys that I could help them put together and play with. It really didn’t make any difference how often they played with them. They were great Christmas gifts and I was their uncle.

Later in life, my kids got the best stuff. Bigger, better and more expensive stuff. The things they really needed for school. The things that made them stand out and feel good. And some things they didn’t really need.

Every year during Christmas the gifts and the amount of money I spent changed. But one thing was sure, every gift I bought came from the heart and I spared no expense. After all, I was the best Santa Claus on earth.


Budget Tips for Christmas & How Much to Spend on Gifts


Unfortunately, there was one other thing that happened every year. It happened in January. My first credit card statement after the holidays. And then began the 11 month ritual of paying off all those great gifts.

Sound familiar?

The Aha Moment

It happened during a Christmas celebration many years ago. We were opening Christmas gifts. The children had received a stockpile of new toys. Some of the gifts came in very large boxes.

After about an hour of opening gifts, the younger children started to play with the large cardboard boxes. Not the toys, the boxes the toys came in. The kids found the cardboard boxes more fun to play with then the toys they had received.

In that moment, I had an awakening. I realized that my approach to gift-giving was out of whack. And that the casualty of my gift-giving strategy wasn’t just the unwanted or unused gifts, but my budget.


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Times Have Changed

I used to approach Christmas gift-giving like my budget was attached to a fire hose. I never planned for any of it. Recklessly spending money on gifts. I rang up the credit cards, then dealt with the fall out after the holidays.

Experience has taught me that regardless of whether you have 12 months or two weeks before Christmas, it’s always smarter, and easier on the budget if you determine how much you’re going to spend first.

If blowing your budget is a common theme during the holidays. Or you find your nephew, nieces, children or grandchildren playing with cardboard boxes. Consider changing the way you approach Christmas gifting.

Ponder these budgeting tips for Christmas and how I approach spending during the holiday season. From the greatest, older and a more experienced Santa Claus.


How Much to Spend on Gifts, Consider Cash or a Gift Card or Wikibuy

Breakdown your Christmas budget to each person your buying for.


Budget for Christmas First – Then How Much to Spend on Gifts

Before you venture out on your holiday shopping spree, do a quick sanity check on your budget. Determine how much money you can afford to spend. Then breakdown that total to each individual you’re buying for.

What you will find is that it’s much easier to stay on budget when you allocate your total budget to each individual. If you are using credit cards to make purchases (which I don’t recommend) you will minimize how much you charge.

There is no right answer to how much you should spend on Christmas gifts. Everyone’s finances are different. Don’t get caught up in the herd mentality of what others are doing. Or what the latest national average is on gift-giving. Budget only what you can afford.

Budgeting for Christmas is a smart personal finance move. An opportunity to end the year on a high note and start the upcoming year without any debt.

Don’t Overcompensate on Gift Giving

By overcompensating I mean don’t let your emotions dictate the value or importance of the gifts you’re buying. For years this was my greatest downfall.

Getting caught up in the holiday spirit of gift-giving can be a genuine pleasure. Who doesn’t like to shower nieces, nephews, and grandchildren with gifts? Or give mom and dad an elaborate item to show them you appreciate all the things they’ve done for you.

Unfortunately, sometimes the whole gift-giving process can get a bit zealous. Especially when we feel we need to overcompensate because we haven’t visited enough, called enough or missed a birthday earlier in the year.

Overcompensating for our own misgivings or guilt inevitably leads to expensive gifts. Or buying gifts that aren’t really needed or wanted. (I think this is how fruit cake got started)



Approach gift-giving from the perspective of what the person needs or would really appreciate. Avoid buying gifts to fill some void you may be trying to overcompensate for.

After all, if the person you’re buying gifts for really cares about you, they won’t want you going into debt over a gift. (Ok, maybe the grandkids will.)

Consider Giving Cash

Yeah, I know what you’re thinking, how special is it to give someone cash. Sounds like something a guy would do right? We’re good at giving gifts that require the least amount of effort. However, before you pass judgment, hear me out.

Cash is a simple gift, and under the right circumstances is greatly appreciated.

As my grandchildren got older I found it increasingly hard to buy gifts they would play with let alone use on a regular basis. Countless times I struck out. Missing the mark on gifts they didn’t use or find very interesting. (Again, think cardboard boxes)

Much of this was due to the fact they were receiving so many other gifts from parents and other grandparents. Christmas morning was like a major sugar buzz for them – so many gifts they didn’t know where to start or what to do.

As they got older and started to understand the value of money, I found that giving them cash or a gift card was the way to go. They quickly learned that cash or a gift card allowed them to purchase what they wanted. In addition, giving cash provided them with an opportunity to learn about money.

Giving cash or a gift card is an easy way to meet your holiday shopping requirements. In addition, once you determine how much you’re going to give, there is no way to miss your Christmas budget. (You can check out Amazon’s gift card selection here.)

Consider giving cash to pre-teens, teens, college students, and young adults. You may be surprised how much they appreciate cash as a gift. After all, it’s likely they don’t have any.

Cash gifts don’t work well for parents, older siblings or cats, and dogs. And guys, please don’t make the mistake of giving your spouse cash as a Christmas gift.

Split the Cost of Gifts with Someone Else

This method of budget management works great if you are purchasing items that are pricier than any one individual wants to spend. For example, jewelry for mom. Dad needs a new coat. Or maybe nephew Billy needs hockey equipment because he wants to be the next Wayne Gretzky.

Splitting the cost of a gift(s) will allow you to purchase more expensive items without overextending your budget.

Comparison Price Online

For many, the holiday shopping season is a family tradition. To spend time with friends and family and enjoy the shopping experience. Early mornings standing in line for a great deal. Gourmet coffee mid-morning. People watching at the mall. And a late lunch and a return home after a long day of shopping. For many Christmas shopping is a major event.

I love early morning shopping sprees with family. Not!

For me, the hustle and bustle of store shopping ranks right up there with cleaning the shower. It’s not for me.

Shopping online or in a store comes with an unlimited number of temptations to buy more and save less. Yet everyone understands the convenience that online shopping has brought to the Christmas giving process.

However, what I have found is that by searching the internet I can much more easily match up an amount with a gift. Versus finding the gift first then trying to find one that fits my budget.

Once I find a gift that meets my budget, then I determine if I should buy online or purchase the item in a store. Use online shopping resources to not just find the gift you’re looking for, but the one that meets your budget.


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Sign Up for Cash Back Rewards

I have never been a fan of cash back rewards on credit cards. To me, the cashback incentives are always negated when you make minimum payments and are charged interest. This type of cashback system requires an enormous amount of discipline for the math to work. And guess what, for most, during the holiday’s discipline as it relates to spending is the last thing on the list.

However, there is one cashback program I use on a regular basis where the math is simple and there is no risk of missed payments or high-interest rates. Its Rakuten Rewards formerly Ebates.

Rakuten Rewards cashback program allows you to earn cashback when you purchase items at over 2,000 qualifying online retailers. Cashback rewards range from 3%-10%.

Using Rakuten to earn additional discounts on gifts is simple.

  • Sign up at the Rakuten Rewards website.
  • Locate your favorite online retailer.
  • Purchase your Christmas gifts as you normally would.

Rakuten will track your online shopping trips. Provide additional discounts in the form of cashback. When your cashback total is $5.01 or more they will mail you a check. Personally, I use this service anytime I shop online.

The only risk with this type of cashback program is if you approach your cashback savings as an opportunity to spend more. Don’t do that.

Budgeting for a Happier Christmas

It is easy to understand how many Americans can get overextended on their Christmas budget. There’s Black Friday and Cyber Monday deals, 24 Hour Specials and the One Day Only deals. Heck, this year the holiday shopping season started before Halloween. All of these events make shopping and spending more that much more enticing. Of course, that’s part of the holiday environment the allure that makes this time of the year so great.

However, it’s not like Thanksgiving or Christmas come at a different time each year. If your one of those that find your budget upside down by mid-January. Take the first step in making the next holiday season a success for you and your finances.

  • Create a budget for Christmas based on what you know you can afford. Then you will know how much you can spend on gifts. 
  • Keep your emotions in check. It’s not the price of the gift that’s important it’s the thought.

Finally, if you establish a budget for Christmas before all those big shopping events start. You will find your shopping experience and finances that less stressful and your January that much more enjoyable.

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Do you have a Christmas budgeting tip that would help others save money? Comment below.




Kevin is the owner of FTP and the author of the personal finance book series Filling The Pig. He uses his past successes and failures with debt, saving cash, investing and running home-based businesses to educate others about successful money managment and Creating a Lifestyle of Opportunities.

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