How to save money and budget for holiday shopping

Reining in your holiday shopping to stay on budget doesn’t mean you have to turn into Scrooge. By following our tips and budgeting for the holidays, you’ll feel less stressed, enjoy gift giving more, and maybe even have some money left over after the holidays. 

Decide your holiday shopping spending limits

The first step of holiday budgeting is to create a spending limit. This is the time to be brutally honest about how much money you actually have available for holiday shopping. And we don’t mean your available credit line—we’re talking cold, hard Grinch green cash that you already have in hand. 

Why this approach? Even if you plan to pay off credit card expenditures right away, credit cards can lead you to spend beyond your budget. If you start by setting your budget completely independent of any credit card limits, you’re less likely to overspend. 

Creative ways to supplement your budget for the holidays 

• Go through unused gift cards that might make great gifts all by themselves or help you pay for a gift for someone.
• Credit card points that you might be willing to use towards purchases or to help cover travel costs if you’re visiting family out of town.
• That change jar sitting in your closet.
• Shift spending money that is budgeted under ‘wants’ during the rest of the year into your holiday budget. For example, if you normally budget a night at the movies every month, put that money towards your a holiday savings account instead.

Ways to make fast cash to increase your holiday spending limit 

If you’ve added up all your money but decide it’s not going to be enough for your holiday shopping needs, we have some ideas to help you earn side money fast!

• Sell off any items that are collecting dust, such as a baby stroller you no longer need or a bike you don’t ride.
• Sell gift cards for cash
• Return any recent, unused purchases that you are having second thoughts about.
• Take on extra hours at work.
• Cut out normal expenses like your daily latte.
• Go through your monthly expenses and get rid of things like unused subscriptions to cable channels or gym memberships.
• Save on gas money by riding your bike or walking places. 
• Cook at home.
• Donate blood.
• Add a side hustle like Uber Eats on top of your regular job. 

Check out our article How to make fast cash for more ideas on becoming a green, money-making machine.

Create a list of your holiday expenses

Now that you know exactly how much money you have to spend, it’s time to make a list and check it twice for all of your planned holiday shopping expenses. It’s important to detail out these expenses to make a realistic holiday budget that matches the money you actually have.

Here is our list of top holiday shopping expenses

• Gifts: Who are you buying for, and what is your spending limit per person.
• Travel: Flying across the country, staying in a motel, or taking an eight-hour drive to the parents?
• Holiday parties: What are you expected to bring? Include bottles of wine, money spent on hors d’oeuvres, gifts for your host, etc.
• Decorations: Christmas tree, wrapping paper, lights, etc.
• Christmas cards: Cards, stamps, envelopes, etc.
• Work: Gift exchanges or after-work parties

Create major categories for yourself with detailed items of exactly what you will need for your holiday shopping, or think you need, then rough out a guesstimate for how much you think each thing will cost.

Once you’ve done this, add it all up and see whether that number matches up with how much cash you have to spend on the holidays. If it doesn’t, keep reading for holiday savings ideas.

How to create holiday savings out of your expenses

If you’re like most of us, your planned holiday expenses may be well over the actual money you have budgeted to spend. That’s why the next step to budget holiday spending is so crucial: finding ways to cut your holiday expenses.

Set spending limits on gifts

Whether you set limits for how much you plan to spend on each person on your list or agree to spending limits among friends and family, set your limits and stick to them. 

Consider homemade or personalized gifts

Gifts from the heart are often more appreciated than anything you can find in a store. There are plenty of great gift ideas out there to make, from a photo blanket, personalized coffee mugs, to a plate of sweets.

Keep your own ‘naughty or nice’ list

If you’re the kind of person who feels you need to buy presents for everyone in your life, this is the year to stop and focus on your holiday savings goal instead!  Keep close friends and family on your nice list and bake cookies for all of the ‘naughty’ people in your life.

Draw names for a gift exchange

Rather than everyone buying a gift for everyone, consider drawing a name, so you only have one person to buy for.  Make sure to set a spending limit on how much everyone should spend.

Make time your gift to people

Moms and dads, grandmas, and grandpas mostly just want to spend time with you. Forgo the holiday shopping and create coupons that say something like, “Good for three hours of cleaning” or “Redeemable for one home-cooked dinner”. They’ll love it!

Don’t buy your pets gifts

We love our dogs and kitties sooo much it feels wrong not to spend money on them, right? The thing is, they don’t know the difference! Add a couple of extra treats to their food bowl and accidentally drop bacon on the floor Christmas morning, but whatever you do, don’t spend fifty dollars on toys for your pets!

Cut down your travel expenses

Just because you have to travel for the holidays doesn’t mean it has to break your budget—use points to cover hotels or flights, stay with friends or family rather than a hotel, forget the rental car and take public transportation. If you have to travel far to see family, increase your holiday savings by making your presence your gift to them this year.

Consider skipping travel altogether. If you’ve made the same holiday trip year after year, don’t be afraid to shake things up and just not do it for one year.

Don’t break your bank overspending on holiday parties

Hosts and fellow merrymakers are just glad to see you, don’t spend too much money on an expensive bottle of wine to bring to a party. Two Buck Chuck from Trader Joes is still a great quality wine and super easy on the wallet.  Want to fancy it up even more? Make mead out of your cheap wine, it will be a party favorite on a chilly night.

And if you’re hosting a party, make sure to put out the word that everyone should bring a dish or a bottle to take the pressure off of you to provide enough for the whole party.

Cut back on decorations and other extras

Chances are you’ve got plenty of decorations, wrapping paper, etc to last you a few holidays from now. Take inventory of what you have before you buy any new decorations or things like wrapping paper and ask yourself, “do I really need this?” before you make any purchase.

Take advantage of sales and coupons for your budget holiday savings

Between Cyber Monday, Black Friday, Small Business Saturday, and every other sale through the New Year, you can hardly not take advantage of sales. If you’re holiday shopping at all this year, don’t pay full price for anything! You may even want to consider buying gently used products depending on the item.

Track your spending against your holiday budget

Keep your budget updated — track the receipts from all of your holiday shopping or collect your debit/credit card statements and keep a running total of expenses. Any second thoughts on a purchase, take it back!

After the holidays, total up all your spending and start saving for next year. Divide the total amount by 12, add 10% more to account for inflation and other factors, and set that much aside each month for a financially happy holiday next year.

The best part about holiday budgeting is that it will help cut down on financial stress during your holidays. You may find that doing less holiday shopping and spending less money means investing more time with your loved ones and that can make your holidays more special than ever.