How To Plan For A Frugal Christmas Budget


Many families are heading to the holiday season with one thing in mind: How do I head into the Christmas season with a budget?

The holiday can be pricey and may force us to spend our way into debt.

In fact, around 44% of individuals have spent over $1,000 in a recent survey.   According to Varo Money, 74% of individuals have underestimated the budget. No wonder we’re a nation of high credit card debt.

So how to do we plan for a frugal Christmas budget this time around? Or how do we stop overspending?

The Gifting Mindset

Overspending habits start with the mind.  We feel compelled to show affection to our loved ones and friends by buying the perfect gift.   Or, if someone provides a gift, we feel compelled to reciprocate.  

Who doesn’t feel the pressure to respond to someone giving us an unexpected gift?

Our desire to please makes us compelled to overspend as a means to show appreciation.  And to get out of this mindset, we need to stop thinking that the amount of money spent equates to the amount of our affection. 

Instead, step back and consider that practically anything can hold value for someone.  Sometimes the smallest and non-expensive things could go a long way.  I find that the cheapest gifts are often the most cherished.

How Much Should I Save For Christmas?

This will depend on a number of factors.  Do you have a big family? What’s your income? Surely, one family’s need is different from another’s.

Break Apart Your Spending

If you go with the statistical average, you may need $1,000 for holiday gifts.  Instead of racking up credit debt, think about breaking up the $1,000 (or a number suitable for you) by 6.  So, once June rolls around, you allocate a monthly amount of $167 ($1,000/6) to a savings account.  

Breaking apart the Christmas budget is easier and maybe more effective than paying up one lump sum. 

Set Aside A Separate Bank Account

If you’re worried that you’ll touch your Christmas savings account, create a new bank account outside of your primary one.  This way you won’t notice the money accumulating in the new account.  More importantly, there will be less temptation to tap into the Christmas savings account for other uses.

The new account should be connected to your primary account so that you can transfer money periodically. 

Need Money For Christmas?

Not everyone has the budget for Christmas spending.  Instead of borrowing, consider getting a side hustle.  Check out the side hustle article here in

Profitable Side Jobs and Side Hustle

There are so many great ways to make money on the side, even for introverts.

The money that you can save through a side hustle may help you avoid potential credit card debt problems.

Avoid the Black Friday Trap

What gets people to the stores are the “Door Buster” advertisements.  The ones with a price that you can’t believe.  It’s true that these items are radically discounted.  (However, in most situations, the quantities are limited.)

The Black Friday ads do often get the people to the door, which is why they’re called “Door Busters.”  But once shoppers rush in, they’re going to buy items that they did not intend.  It’s the same reason why you see the milk and eggs at the back of the grocery store.  They want you to peruse through the store and pick up marked up items that were not originally part of your shopping list. 

Also, you’ll notice the original prices door buster prices are highly marked up.  When they slash the price by 50%, you’ll think you’re saving a bundle.

Creating a Reasonable Christmas Budget

Most often, shoppers don’t compare prices or plan to get the holiday shopping started.  Here are some effective ways to make the best use of your money.

Check Online Price Comparison Tools

I like to use   This oddly-named website is a great tool and an alert system that can help you find the lowest price online.  

Try finding an item that someone wants.  Once you find the product, enter an alert with your email and price trigger.  If it falls to your price, the site will issue you an alert email.

Another site to monitor prices is The deals site is essentially a forum but it can, like CamelCamelCamel, set up an alert system as well.   There’s even a Black Friday section for people who want to know the best deals for this day.

If you’re using a smartphone, try some great apps like RedLaser, SnapUp, and CouponSherpa.  Apps like these listed can allow you to take a snapshot of the bar code and compare the product to other retailers (physical and online).

Create a Spending Limit

Many families don’t have a spending limit on gifts for children.  Try creating a ceiling for each child, especially for extended families.  This way, you’ll know that everyone is chipping in their fair share to the Christmas bucket.

For spouses or couples, try forcing a limit as well.  I’ve known so many couples who feel like they have to better the previous year to please their spouse.

For work environments, think of a Secret Santa or something more equitable so that people don’t feel the pressure to overspend on everyone.

Make Your Own Gifts

Another frugal Christmas tip is to make the gift itself.  For the arts and crafts inclined, making a gift adds a great personal touch.  I’ve received a crochet blanket from my grandmother a while back. We still use this blanket to this day and it reminds me of her when I see it.

If you’re not arts and crafts inclined, there are plenty of YouTube videos that can show you how to create gifts from scratch. 

Also, pictures work since they can be printed cheaply and framed.  If you’re a member of Costco or other warehouse services, there are discounts to get it framed or created out of materials like metal. 

Buy Christmas Accessories After Christmas

Not surprisingly, retailers depend on shoppers to buy Christmas accessories like decorations, gift wrapping paper, and trees before Christmas day.  This is when the prices are the most marked up with the highest prices.

Think the opposite.  Buy the accessories right after Christmas where retailers see the lowest demand.  This is when you can find the best prices.  

If you have something like an artificial wreath in mind, try buying the item after Christmas.  Stores will often mark down the prices 50% or more.  In fact, this is when I buy Christmas wrapping paper under $1. 

Buy Gift Cards and Gift Codes

Looking to purchase a $100 product?  It’s possible that you can purchase it for $80.

Shoppers are now using gift cards more than ever.   You can find a discounted gift card site or through major warehouse companies.  Some of them are even 20% off.

Check out discount sites to get a discounted gift card:

Gift Codes can also save you some money.  Like physical gift cards, they are sold online as a virtual gift card in the form of a number.   The codes are often sold at a discount because the retailer or issuer can bypass the cost of creating a physical card.

Find Cheaper Travel Options

Traveling during Christmas is not only hectic, but also quite expensive.  If you need to travel for Christmas, consider looking for cheaper fares.

Check out sites like  Google Flights to track flights before your trip.  It will give you the cheapest fares and notify you if the prices go down (or up).  The tracking tool even allows you to keep tabs on flights months before your trip. If you see a price that you like, you can go straight to the site to start booking.

Timing-wise, you should always start early.  Don’t wait until the last minute to book your flight because prices skyrocket during that time.  The earlier you plan your trip, the greater the chance you’ll find the right fare.

Google Flights isn’t the only player in town. Try Kayak, Expedia or Priceline for price comparisons as well.

Also, think about non-direct ways to get to your destination.  For example, you may live in San Jose, California.  A fare from San Jose to Miami might be $1000.  If you try another flight from a bigger market, say, San Francisco, you might be able to get a fare half of the cost.  Check other cities near you for alternate prices.

Trains and boats can also be another method of travel. You’d be surprised to see a radically different fare if you consider alternate travel options.

Small Extra Expenses

Small expenses add up to a large expense.  Want to get a nice bow for your present?  The bow may cost a few dollars, but in the end, the costs do add up.  (Maybe large enough to buy another present.)

If you have a daily expense like lattes and coffee, these small purchases can add up.  You’d end up with a monthly expense of over $100 with this habit.  Start brewing coffee at home and take it to go in a travel cup to work.

Stocking Stuffers can be a tradition that could escalate your expenditures.  If you purchase stocking stuffers for your family, keep it cheap.  Remember, stocking stuffers, are just that. They are small items that shouldn’t be pricey gadgets and gifts. 

Frugal Christmas Dinner Ideas and Party Tips

If you have ever hosted dinner, you’ll notice that expenditures can pile on as you start planning.  Americans are spending on average over $150 for Christmas dinner.   And what’s even more astonishing is that 64% of hosts say they will pay it all themselves.

Dinner hosting is an important role and you should be commended for the time and money you put in.  However, planning and preparing could be a daunting task and it can be as expensive as gift giving.

Here are some great ways to save on Christmas dinners and parties:

Cook from Scratch

Ingredients are the lowest priced food items.  If you cook from scratch, it can save you some money.  This should be obvious, but there are times when we find premade stuffing or a catered turkey dinner at our favorite grocery store. 

Preparation involves time and companies will charge you extra for the convenience.

Keep Things Simple

There’s always a temptation to please or blow away others with your Christmas dinner.   You may want an elaborate spread of gourmet food so that your family will talk about it forever.  However, you probably already know that this will cost you more in the end.

Save some money and time by keeping your dinner simple.  Most families care about being with others, not always what’s in front of them.

The traditional turkey dinner is fine with the common side items like cranberry and stuffing.  Don’t go overboard.

Ask Others To Contribute

Ask your family members or friends to bring in their contribution to dinner.  It will make them feel that they are participating.  You’ll feel good in the end because of the less burden.

Family members don’t have to overwork since it could be a simple side dish or something that they enjoy to cook.

Likewise, for drinks, you can ask some to bring in a bottle of wine or liquor, or even cans of soda.  It’s especially costly for alcoholic drinks and having people chip in won’t have to put a dent in your wallet.

Keep it Cheap For Party Gifts

If you’re hosting a Christmas party, you can still have fun without spending on gifts.  Consider a gift exchange or a game using items that you already own.  They could be items that you don’t want.  Think of accessories, old toys, candles, kitchen appliances, etc.

What about a regifting party? For parties after Christmas, a regifting party would allow participants to have a fun time and exchange gifts that people don’t want.  It’s a great way to recycle your gifts!

Party favors can also add up.  Think about very cheap favors like candy or just remove the tradition entirely.   Remember, people are at your party for social reasons.  It won’t go wrong if you don’t have your traditional party favors.

Final Thoughts

If you’re struggling to find a frugal Christmas budget, start with a plan.  Give it a few months to start planning, or even a year.  By having a plan and a good mindset, you go forward with a strategy to lower overall costs for Christmas.