How to Enjoy Christmas on a Budget

The holidays are supposed to be a joyous time of year—one for spending with family, friends and loved ones, for giving and bringing smiles to peoples’ faces. Many people go all out and indulge in the parties, the celebration, and the gifts. And that’s great! But once January rolls around, their bank accounts are empty. They’re hurting for cash, scrimping and saving to try and make up for the amount they blew in December. It’s hard to live it up on a budget, that’s for sure, but it can be done. And it’s worth it to save on the stress of building your savings back up in the new year. So why not give it a try?

Here are a few tips to help you have a great time during this holiday season… without burning a hole in your wallet.

Draw up a budget ahead of time.

No one wants to set spending limits ahead of time, especially not on a holiday dedicated to giving, celebration and excess. It’s no fun! It’s likely you’ll be invited out to events, and like many people, you’ll want to spoil your loved ones. You might even want to host something of your own over the holidays! But not setting a budget for gifts, décor, and food gives the illusion that the sky’s the limit – and, for most people, it isn’t. Prior to December, sit down and figure things out. Taking a look at your bank account, determining what you can save, and figuring out what you can afford to spend in each category will keep things much simpler once the holidays hit. And you won’t be panicking when you check your accounts come January.

Credit: Dreams Time Stock Photography

Set spending limits with family & friends.

It’s quite likely that your family and friends don’t have unlimited funds to spend on gifts, too. But if everyone keeps quiet, the pressure to spoil your loved ones and to get them something extravagant can become overwhelming. Don’t be afraid to speak up—ask the people in your life with whom you’ll be exchanging gifts to set a manageable spending limit this year. For example, I’m still new to my career and my sister is in school, so neither of us is able to spoil each other with tons of gifts right now. We’ve set a $40 spending limit for Christmas this year, and it’s taken off a lot of the pressure to break the bank when buying gifts. I don’t have to worry that she’s going to spend a ton on me and I’m going to come up short with her gift, which leaves me free to focus on finding something she’ll really love. Setting manageable limits with friends lets you focus more on picking a great gift and less on how it might drain your account.

Shop around for deals.

Many people are last-minute Christmas shoppers—and sometimes, when you’re desperate to pick up things for people under the wire, you’ll spend more than you should because you don’t have time to waste. Try and shop sales earlier in the year and pick things up if you see something perfect for your loved ones. And do your research online—you can investigate prices for that specific electronic or item of clothing, and can find the retailer that sells it for just a little less. Shopping the Black Friday sales for gifts, as well as things for yourself, is always a good idea. And if you’re buying gifts online, try to pick your purchases out before the middle of December. No use paying more for rushed, priority shipping when you can avoid the cost by ordering a few weeks earlier!

Carry cash to track your spending.

This is a trick I’ve just implemented this year, and it’s helped tremendously. Even if we set a limit for peoples’ gifts, it’s so easy to say, “Oh, well, this is only ten dollars more. What’s ten dollars more, really?” when we’re paying with a debit or credit card. That ten dollars might not be a big deal… but what happens when you’re buying gifts for ten different people? You could wind up suddenly spending far more than you’d expected, since it’s so easy to make purchases with plastic. Carrying cash—and leaving your cards at home, to stop yourself from digging them out!—eliminates this additional spending. Write down the spending limits you’ve set for all of your gifts, and then withdraw that amount of cash from an ATM. Bring it home and divide it up—put each amount into its own plastic baggie, label them with each person’s name, and take those baggies with you when you go shopping. That way, you’ll only spend what you physically have on you—and, ultimately, what you can actually afford. 

Credit: Kids’ Spot

Avoid extra impulse add-ons.

When I was younger, I somehow got it into my head that the gifts I’d chosen for people—a book, or a season of a show on DVD—weren’t enough. That they weren’t complete, since they just contained one item. So I’d go around and pick up chocolate for each person’s present, too. Of course, Christmas chocolate isn’t cheap, and at the end of the day I’d spent almost $40 more than I’d planned on my gifts, just with these last-minute add-ons. And that isn’t necessary! If you can, plan out what you want to buy each person before you go shopping. And don’t allow yourself to throw extra bonuses into your cart at the last minute, even if they’re adorable or inexpensive. One might not break the bank – but no one ever gives in to just one impulse. Pick your gifts and don’t throw in extras that you haven’t budgeted for. The one gift is enough and is going to be loved—no one will miss the extra chocolate bar. 

Consider handmade gifts.

Some may turn up their nose at the idea of handmade gifts, envisioning tasteless scratchy sweaters knitted by clueless but well-meaning aunts, but I think that stigma needs to be done away with. There are so many different types of DIY gifts out there, and though they may require a bit more time and effort, they’ll often come at a fraction of the cost. Hand-knitted hats and scarves to match a person’s winter jacket are perfect in cold climates. If you can draw, consider doing pieces for friends and siblings – things like a drawing of your friend hanging out with their favourite character is sure to be a huge hit! And if you aren’t crafty or artistically inclined, something as simple as hot chocolate in a jar is a pretty, useful gift. Put some thought into personalizing your handmade gifts and gear them towards your recipients’ likes and interests, and you can’t go wrong. And your bank account will thank you!

Organize a Secret Santa.

If you’re someone like me who has a close circle of friends, it can get pricey to pick out gifts for each person. That’s where Secret Santa comes in, and is always a huge hit! Again, other people are likely on a budget, just like you, and would appreciate not having to get a gift for each person in the group. Just set a spending limit and encourage people to get creative! There’s the added bonus fun of the secrecy of who’s buying for who, too. And Secret Santa doesn’t have to be just for groups of friends. My family on my mom’s side has nine kids, including myself, and it’s gotten pricey, everyone buying for everyone. This is our first year that we’ve instilled a Secret Santa policy – each cousin’s been assigned another to buy for. It’s been a good way to save some money, and to get to know each other from investigating each other’s likes and dislikes.

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Host a potluck dinner.

Most groups of friends do some sort of holiday gathering at this time of year. If you’re like my friends and I, you go out to dinner together; others take turns and host a gathering in their homes. Both are great ways to spend time together, but they can get expensive. Either the host is paying plenty for food, decorations, and alcohol, or everyone’s paying marked-up restaurant prices. Why not cut back on all of that and host a potluck dinner? Organize ahead of time through something like a private Facebook event—have everyone write down what they’d like to bring, and ensure that you’ll have a full meal on the day of. Either make it BYOB, or assign one person to bring several bottles of wine. With a potluck, everyone’s sharing the cost; no one’s paying eight dollars for a drink, and you can focus on what’s important—celebrating the holidays together.

Save up early.

Christmas can really put a dent in your finances—that’s the moral of the story. There are ways to cut corners, to share costs, and do nice things in an inexpensive way, and all of these things can really help. But maybe the best idea for avoiding that money-crunch in December is to start saving early. Figure out what you spend on the holidays this year once they draw to a close, and start saving up for next year. A little bit out of each paycheck over the course of a year can leave you smooth sailing come next December. Even just dropping your loose change into a jar labeled “Holiday Fund” instead of letting it pile up in your wallet or the pocket of your jeans can really help.

At the end of the day, when it comes to Christmas, every little bit of money can add up. It’s just up to you whether that money adds up to a whole lot of spending—or a whole lot of savings.