How to Save Money for Christmas

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It’s time to start thinking about how to save money for Christmas this year.

Yes, even several months ahead of time!

In fact, if you really want to eliminate holiday money stress, you should think about starting a Christmas savings plan in January each year.

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    That way, if you’re trying to save $1,000, you only have to come up with about $83 each month…instead of the whole thing at once!

    Even if you haven’t started saving months in advance, I still have some helpful tips for how to help you save plenty of money for Christmas this year!

    How to Save Money for Christmas

    Establish a Christmas Budget

    Decide how much you need to save for Christmas and stick to your budget!

    The Christmas season is all about encouraging people to spend more, want more, and impulse buy.

    In order to keep your self from overspending, you need to have a plan before you hit the stores!

    How much do you need to Save for Christmas?

    That depends on your current financial status and goals.

    I’ve heard it suggested that you should spend no more than 1% of your annual income on Christmas.

    That means that if you make $50,000/year, you should only spend about $500 on Christmas.

    That’s for everything, including all of those fun Christmas activities, stocking stuffers, and even decorations.

    We make over six figures, but because we are on a very strict debt free journey, we try to stick to a budget of about $500 as well.

    There will be plenty of time to spend big at Christmas, but right now our goal is debt freedom.

    We find that $500 allows us to have a very fulfilling Christmas season, even with three young children.

    Read: How to have a Debt Free Christmas

    Use Cash and Avoid Debt

    When you shop with cash, it’s much easier to stick to your budget.

    You can withdraw the cash before the season begins and place it in an envelope.

    This will make it much easier to stick to your budget, and physically see the cash leaving your wallet!

    Avoid the temptation to put Christmas on a credit card. You’ll end up paying much more later!

    Don’t start the new year with stress over your December spending.

    Read: How to use Cash Envelopes

    Establish cheap or free Christmas Traditions

    Before we were on our debt free journey, it was common for our family to spend tons of money on Christmas activities each year.

    Now we do a little extra research and plan ahead for free community events, and other free Christmas activities like driving around to look at Christmas decorations.

    Save Money with DIY Christmas Gifts

    Everyone loves a sentimental, homemade Christmas gift!

    You can save so much money by creating your own Christmas gifts for family members, neighbors, and friends.

    A few dollar store items, strategically placed in a functional basket or bin, can make an inexpensive gift look like a million bucks.

    Read: DIY Christmas Ornament Ideas

    Draw Names for Large Families

    If you have a large family, or extended family, that you often find yourself buying gifts for, it can helpful to draw names so that you don’t have to get everyone a gift.

    This can also be a really fun game, if you decide to do secret Santa, or a white elephant exchange.

    Start Saving for Christmas Early

    It’s much less intimidating to save $100 or $200/month, instead of trying to come up with $1,000 in November before the Christmas rush.

    If it’s already December, don’t feel bad for not starting earlier! Learn from this and start your holiday savings plan in January next year!

    Make sure you download my FREE Christmas savings trackers to keep you motivated as you reach your goals.

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      Pick up a Side Hustle

      It really only takes a few hours a week to earn a few hundred dollars to cover the cost of Christmas so you can pay cash and avoid reaching for that credit card.

      My husband does Door Dash to save for extra “fun” things like Christmas, Birthday gifts, or mini vacations. He often earns as much as $500 in one weekend.

      You can sign up to be a Door Dash driver here.

      Read: Side hustle ideas to Make Extra Money

      I hope these tips help you stay on track with your budget, so you can have a debt free Christmas and save money to pay for Christmas in cash this year!

      Make sure you grab my holiday savings trackers so you can save money for Christmas and stay motivated while you do it!

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      Original post July 2020, updated June 2021.

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      hi! I'm shannon

      I’m a wife, mom of three, doctor, and blogger! In 2018, I decided to turn my mom blog, into a personal finance blog so others could follow along on our journey to pay off over HALF a MILLION dollars in student loan and practice start up debt. I hope you enjoy following along, and maybe even find some inspiration along the way.