Christmas Budgeting – Building A Christmas Fund

November 10, 2008

Halloween is over, Thanksgiving is around the corner, and the biggest shopping season of the year is close to follow.  The shopping in November and December is what keeps financial planners and debt counselors employed. 

Budgeting for Christmas Gifts

Many people go nuts with Christmas and holiday shopping.  I know I’m guilty of it; I tend to wait to buy certain items because I know the deals will be so good in the Christmas shopping season.  But, if you want to live a life of building wealth and making wise financial decisions, you need to prepare for Christmas. 

Hopefully, you’ve already started thinking about how much money you will spend this holiday season, and maybe you’ve already started saving for it.  I am a big believer in preparing for Christmas to the point where you don’t need to use your credit cards, so here are four steps for building your shopping fund for the holidays.

Step 1: List out all of the people that you will buy a gift for this season.  Make sure you don’t go overboard on this.  My wife and I have started prioritizing our gift giving to parents, nephews and nieces, brothers and sisters, best friends, and each other.

Step 2: Put a dollar amount next to each name on your list.  This represents the total amount you can spend on them for a gift.  Then, total it up and analyze if the number you came up with is realistic for your budget.  If it’s not, tweak some of your numbers until the total amount looks reasonable for your financial situation.  Once you’ve come up with a total amount, you now have a number for your shopping fund.

Step 3: There are seven weeks until Christmas.  If you haven’t set any money aside for the holidays yet, start putting aside money each week for your Christmas fund.  Also, any extra income that comes in during this time should be thrown in your Christmas fund such as a holiday bonus, quarterly bonus, or side income.  You may also want to consider putting extra money in the fund for Christmas entertainment and family trips that you may take over the holidays.

Step 4: Don’t let your Christmas fund suck the fun out of the holidays.  If you set aside $50 for your brother or sister and you spent $53, don’t freak out.  It won’t break your bank.  Let the budget be your guide.  Just look for a better deal or a coupon on the next gift you purchase.

Trust me, if you’re following these steps, chances are you’ll be doing much better than the majority of the population that has no clue how much they are really spending on the holidays until they get their credit card statement in January.

Making Christmas Special

Remember to give back to others in need during this time of year if you can.  It seems we all run a little short on money during the holidays so the best way to make sure you can donate is to budget in a certain amount for charitable giving ahead of time.  These acts of kindness are what really make the holidays so special. 

Also, don’t get caught up in getting the perfect gift for a loved one.  Instead get caught up in spending quality time with the people you love the most.  Thinking about your finances now will allow you to think about what is most important during the holiday season.


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Erik Folgate is a husband and father living in Orlando who's been writing about money online for 6 years. Digging himself out of $20k of debt after college and his former experience in the insurance industry give him some useful insights into personal finance issues.

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14 Responses to Christmas Budgeting – Building A Christmas Fund

  • Cheapiness

    Love the tips! They are really helpful ways to keep spending in check.

  • Joshua

    One of the things that helps as well is remembering that not everyone has to have a $50 gift. Keeping it simple sometimes is the way to go, and a craft or simple gift done with sincerity makes a difference.

  • Kelvin

    That is a great list of steps helping me to build a shopping fund and use it for Christmas Gifts.

  • DD

    These are great tips!
    Especailly the part stressing to keep Christmas special. We can get caught up in the holiday craziness very easy.

    I recently posted my Christmas budget:

  • marci

    Two additional thoughts: Check at your local bank for a Christmas account whereby a certain amount is taken out of your checking account each month, and returned to you in November. This also works great for property taxes if due in November.

    Shop all year round 🙂 and shop cash. By September or October I am usually done with my shopping – leaving only a few packages to mail the first of Novembe (today actually). This really eases up on the stress!


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