3 Steps to Planning Your Christmas Spending

October 11, 2016

3 Steps to Planning Your Christmas Spending

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The Christmas season is an exciting time of year. Lots of food, friends, family, and more food. What more could you ask for? How about a Christmas without financial stress?

It’s a little ironic that the very season that is meant to bring us joy is often accompanied by stress, worry, and anxiety, isn’t it? That doesn’t have to be the case, though. We know that Christmas is coming — it happens at the same time every year. By budgeting and planning ahead, we can focus on the reason for the season.

Minimize the financial stress of the season this year, and avoid paying for Christmas in the new year with these steps.

1. Decide to Spend Within Your Means

This seems obvious; however, it’s easy to bypass this simple step. Make the decision to stay within your means this year. That means you’re not going to spend more money than you actually have to spend — under any circumstances.

Making this decision may require some brutal honesty on your part. If you have to use your credit card to buy Christmas presents, then you are spending beyond your means.

Once you’ve made the determination to keep the holidays within your means, all spending decisions should be made with that in mind.

2. Do a Zero-Based Holiday Budget

Have you in years past spent, spent, spent, only to be shocked by the total amount after you’ve added everything up? Don’t spend blindly this year. Holiday expenses can be handled similarly to the way you would handle regularly monthly expenses.

Start by deciding the total amount you’re going to spend. Ask yourself, is this a $300 Christmas? An $800 Christmas? Once you have that number, identify the categories you will need to spend on and decide on an amount for each until you have “spent” the total amount down to zero.

Keep the following categories in mind.


This includes meals you plan to host, dishes you will make as a guest, and any baking or cooking you plan to do as gifts.


Make a list of everyone you intend to shop for, and assign a dollar amount to each person. Be sure to remember gifts you typically give to neighbors, teachers, and co-workers; any tipping you normally do, and any charitable giving and donations you plan to make.

Travel / Transportation

Estimate all transportation costs you expect to incur even if you’re just driving a few hours to grandma’s.


The Christmas season brings many opportunities for fun entertainment. Build in the cost of shows, plays, and other activities into your budget.

Christmas Tree & Decorations

Whether you cut down your own tree every year or pull it from the attic, include the cost of tree-trimming and other decorations.


If you know you have nothing to wear to that party you were invited to or you need a new ugly Christmas sweater, then plan ahead.


If you want your budget to work, then set aside an amount for miscellaneous expenses that may pop up. Having this category built into your budget will reduce any stress that comes with an additional party to go, a few extra guests at dinner, or a couple of expenses that weren’t on your radar.

Learn more about the zero-based budget.

3. Maximize the Time You Have

I admire people who have Christmas accounts and save up year-round. That is an excellent approach, and if you already do that, good job. For the rest of us, not starting in January doesn’t mean waiting until December.

Take the time you have and divide your budget equally by that time. You’ll appreciate saving a third of your holiday budget over three months rather than leaving it all to one month. This is key if you’re determined to keep the holiday season within your means.

Consider setting up a savings account with an online bank like Capital 360 that allows you to set up several different accounts and attach a savings goal to each one.

Open a Capital 360 Account

Following these steps for your Christmas spending will allow you to enjoy the holiday season the way it should be enjoyed.

Let January and February be about undoing the damage you did by overeating and not about undoing the financial damage you did by overspending!

Related Reading: Surviving the Holidays Without Derailing Your Debt-Free Plan, 51 Tips to Have a Frugal Christmas Without Going Broke

How do you approach your Christmas spending?