woman working on laptop beside holiday tree learning How To Create A Christmas Budget And Stick To It

How To Create A Christmas Budget And Stick To It

It doesn’t matter what time of year it is right now, Christmas is always in the back of our minds. I know that it’s hard to spend tons of money each Christmas and be hit with significant credit card bills.

Learning how to create a Christmas budget is the best thing you can do. My method focuses on adding no stress to your life and having a full wad of cash that you can spend frivolously on your loved ones and friends. 

Of course, you’ve got to plan for this and know how much you can afford to spend, and that takes a lot of the fun out of it.

However, when it comes time to shop, you’re going to be glad that you focused on a Christmas gift budget for everyone on the list.

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The Zero-Based Christmas Budget

Before you can dive right in, you’ve got to know what a zero-based budget is. If you want to know how to create a Christmas budget, this is the best method I’ve found.

The concept is quite simple; your income minus what goes out equals zero dollars. Therefore, if you earn $2,000 each month, you want every single dollar that you save, spend, invest, and give to add up to that amount.

You know exactly where every penny of your money goes. To do that, you’ll need the right tools. Of course, this includes a list of how many people you want to buy for and what you’re going to spend on each person.

Some people want a debt-free Christmas. With the zero-based budget, you can get this feature. However, that requires you to know how to create a Christmas budget without taking away from your monthly bills.

Why Create A Budget

When you don’t know where the money is going, it derails your finances. If you don’t have a budget, you could face the worry of having no money.

Of course, you should try to save money wherever possible. Don’t forget to cover monthly bills and save some for your emergency fund. Still, you can have enough to make sure you’ve got plenty to spend.


How Do I Make a Christmas Budget?

The first thing you have to do is get a pen and piece of paper (or a notebook). It’s going to take some time, but you can do this!

1. Write Your Monthly Income

The first step to creating a Christmas budget is to know how much you have coming in. Anything that comes into the household as money is your income. This includes any side jobs, paychecks, alimony, residual income, and all the rest.

If you sell items of any type, include that money, as well. Just make sure that you record each amount and note whether or not it is steady and what you earn monthly.

Sometimes, this is going to vary. You can also utilize budgeting apps online and from the App Store. Add up everything you earn for the month.

2. Write Your Monthly Expenses

This is likely to take the most time and effort. Remember, learning how to create a Christmas budget first means you have to have a regular budget that you use every day. Go here if you need help creating an everyday budget.

You’ll need to consider every single bill you pay, even if it’s not every month. The goal here is not to be surprised by your spending habits. If you find that you’re spending excess on food, it’s time to keep track of things better by creating a shopping list and sticking to it.

This guide breaks down household budgeting percentages to make creating your budget easier.

Make a note of when everything is due, write it down, and ensure you factor in things like your phone bill, cable, internet, groceries, rent, and more. It might be wise to make a new budget every month because some of these things are going to vary.

3. Make a Note of Other Expenses

Of course, Christmas is in December, and it’s always going to be at that time. Therefore, you’ve got no reason to feel that it was sprung on you. If you start stashing money away for your holiday budget now, it’s not going to feel like it hit the wallet all at once.

For an all-in-one solution, check out my Christmas Budget Planner which helps you keep track of your entire holiday season spending.

We’re focused on the holidays, so you want to focus on gifts. Just don’t forget to consider gift wrap, ingredients for holiday dishes, decorations, and all the rest. The holiday season is full of excitement, which means Christmas spending can go through the roof. Keep track of Christmas expenses as they happen to have a better idea of what to do next year.

4. Zero Out Your Budget

Once you have listed everything, add up all the expenses and subtract from the income. Ideally, you want the number to be zero, but it can take practice.

You’ll need to be aware that your expenses and income aren’t likely to balance out like that all the time or at first. If the expenses are too high, you may need to cut out some of your Christmas spending to save money. 

Now is the hard part: You’ve got to ensure you’re not spending anything that you haven’t accounted for in the budget. For example, if you say you’re going to spend $200 eating out, and you’re already at $195, it’s best to either shop on the cheap side or stay home and cook.

Sometimes the cash envelope method is the best way to ensure this because you take out the cash first and only spend what you have on hand. Here are some Christmas cash envelopes to help keep you organized.

If you spend more than you bring home, immediate cuts are essential. You can buy generic items at the store, use coupons, etc. 

Other Considerations

Another rule of the zero-based budget is that each dollar has to have a name. Therefore, you’ve got no more dollars to budget because they are all accounted for.

If you come out ahead by $50 or $100, you’re not done. That $100 has to go somewhere, which can go toward the Christmas budget or into another savings account.

This is going to free you up to relax and enjoy life, knowing that everything is suitable and ideal.

How To Budget Irregular Income

Even if you have an irregular income, zero-based budgeting is a possibility for you. You can actually plan for irregular incomes exactly like regular ones.

The goal here is to list your income based on what you earned the last year (the lowest amount). You can also list the expenses in their order of importance. Of course, focus on food, shelter, clothing, utilities, transportation, and the like first. 

When you get paid, take your money and go down your list from most important to least important. It might not cover everything, but you can pick up and continue with the list next time.

What’s a Christmas Fund?

Many banks offer Christmas funds, which allows you to deposit the money you need and hold it until you are ready to spend it. Generally, you can set up a free Christmas fund, or you can do it yourself. Buy a few envelopes and have that be your account. Don’t dip into that money until you are ready to start spending for the holiday season.

How to Set Up Your Christmas Fund

It’s often easy to set up a free Christmas fund and have a debt-free Christmas. Take the money you’ve set aside each month for your holiday budget and put it in a separate account than your savings. 

Alternatively, you can create a budget line in your preferred list method that says, Christmas Fund. Enter the balance of what you’ve saved, what you want to save, and a long-term goal.

Once you know your holiday budget, and what you’re spending on Christmas, it’s time to divide up how much you’ve got by how much time is left. For example, if you have already saved $500 and have a budget of $1,000 with three months left to go, you should be saving about $170 to have that much money to spend.

This Holiday Budget Planner makes it super easy to track everything. It even includes festive envelopes you can use as your Christmas gift fund.

Of course, this is the best way to create a Christmas budget because then you know what you’ve got to spend. Even if you don’t make it to the goal, you still focus on what’s best for you.

How Much Money Should I Save for Christmas?

Generally, the rule of thumb here is to not spend more than one percent of your yearly income for holiday shopping. Of course, the amount you have to play with depends significantly on your Christmas budget. The average Christmas budget is $942 for each person on your list. 

Clearly, it’s easy to see how much money you need for everyone. Of course, you can find extraordinary deals, shop local, and save money wherever possible.

When you create a Christmas budget, it helps you realize what you’ve got, and you can divide that by how many people for which you’re spending.

If you use the debt-free approach, you aren’t going to use a credit card for any Christmas shopping purchase. This includes everything related to holiday spending, such as fancy dresses, party needs, gifts, and the like.

How Much Should I Budget for Gifts?

That amount is up to you. It’s important to make a list of everyone you want to buy for. Of course, nothing comes for free, so you’ve got to plan ahead to budget enough money for everyone’s items.

You can save money, and some gifts can be free with coupons and other tactics. However, it’s best to plan ahead and divvy your holiday gift budget for each person before you start buying presents.

Don’t Go into Debt

Living free of debt doesn’t start at Christmas time, but it can be ruined during the Christmas holiday. Your Christmas budget is there to ensure that you can buy something for everyone on the list.

Some people might get more money spent on them based on various factors. If you are a stickler, you may divide the number evenly among each person on the list. That way, no one gets a better gift than someone else.

Christmas shouldn’t be about spending. It should focus more on free things, such as spending time with family and enjoying each other’s company. 

Your Christmas budget doesn’t have to reflect that, though. You can create the most appropriate Christmas budget for you and your needs. That way, no one gets on the ‘naughty’ list, and everyone gets a little something.

You won’t feel like Scrooge, you’ll be free of any debt, and you can enjoy yourself this holiday season because of your Christmas budget.

How Do You Spend Wisely At Christmas?

The best way to spend wisely is to learn how to create a Christmas budget. Of course, Christmas is a fun time of year because most bosses cut you some slack, there are endless parties to attend, and you can cuddle up with hot cocoa to watch television.

You want to provide your family with the best in life, which means you must create a Christmas budget that meets your needs. I go over additional Christmas budget tips here to keep you from overspending.

The Christmas budget doesn’t have to be set in stone. It’s easy to think that the list you made earlier is king, but many times, your holiday budget is lowered for various reasons. It’s okay to dip into the account for emergencies, but it’s ultimately better to have a separate emergency fund for that.


When you have a plan in mind, it is easy to create a list of everyone you want to gift and come up with a Christmas budget that meets all of those needs. Of course, you shouldn’t forget about other holiday expenses, such as party attire, food/beverages for parties, and Christmas gifts for the hosts.

You can have various categories for who gets what or lump them all into a single category. Make sure that you check around for the best deals, which might provide you with extra money to spend on others or save for January.

Since you’re doing all this without any credit cards, it is going to be easier to buy presents during the holidays and begin the new year off correctly. So now that you know how, plan your holiday gift budget as early as you can so you’ll make sure you have enough to go around.

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