Creating a Holiday Budget-Make Your Holidays Simple!

With the holidays rapidly approaching, we tend to get excited about spending time with family, the festivities, and all the delicious food. That is, until we think about how much all of that will cost. We cringe and wonder if we can really afford to celebrate the way we want. But we have a better chance of making our money stretch by creating a Holiday Budget!

The Benefits of Creating a Holiday Budget

sign that says It's Beginning to Cost like Christmas

Holidays are by far one of the most expensive times of the year. It is estimated that most people spend between $1,000 and $1500 during Christmas. According to, families will spend 156% of their monthly income over the holidays.

On the flip side, Study Finds indicates that one in five families cannot afford a traditional Christmas due to current or recent unemployment, and 21% feel they can’t afford it as they need to ‘tighten their belts’.

However, Christmas is a time when we want to do things for others. The very idea of not being able to afford it can be depressing.

red piggy bank wearing a Santa hat, calculator, pen to help with creating a holiday budget

By creating a Holiday Budget, we can not only keep our spending under control, but we can also find ways to more with less. If there aren’t many funds available, we can:

Just as there are ways we can trim our normal household budget, there are ways to work within a Holiday Budget. By having everything you spend in an organized method, you have more opportunities to see where you can cut back.

Considerations When Creating a Holiday Budget

small jar filled with money and a paper blue star that reads Christmas Money

One of the most productive ways to stay within your holiday spending budget is to go back to the very beginning. This means adding a line item to your normal budget that is labeled ‘Holidays’, or ‘Christmas’. By having that item in place, you will not only allow for that heavy spending season but will feel more comfortable knowing you have the funds to do so.

It may sound like unnecessary work creating a Holiday Budget, but you may be surprised to realize just how much you actually spend and what you spend it on.

We often think of spending in terms of gifts, food, and decorations. But have you ever thought about those ‘hidden’ expenses that occur? If you go shopping, it takes more gas than normal, as you are making more trips than you usually would each month. Consider shipping supplies and costs, special event tickets, and supplies to make that school costume.

And that doesn’t even account for those impulse purchases, because after all, that snowman ornament was just too cute to pass up!

Christmas gifts wrapped in brown paper tied with red ribbon

To know and understand exactly how much you will spend for the holidays, it helps to sit down and think about what you normally spend your holiday funds on. These are just a few places your money might go:

  • Gifts (family, friends, gift exchanges, teachers, etc.)
  • Food
  • Decorations (inside and outside – including a Christmas tree)
  • Stocking Stuffers
  • Gift Wrapping
  • Shipping (supplies, postage, and when ordering online)
  • Clothing (special events, costumes, etc.)
  • Travel
  • Eating Out

And this is just the tip of the holiday spending iceberg. There are so many things we spend money on that many of them are forgotten about.

Consider eating out. We may want to have a holiday get together with friends or family at a favorite restaurant. But if you are also doing a lot of holiday shopping, you may also want to stop for lunch. In most cases, that can mean spending an additional $15 to $30 that wasn’t considered when creating your Holiday Budget.

How to Create a Holiday Budget

Holiday Budget Excel spreadsheet

Creating a Holiday Budget is similar to a regular budget, but also much more simplistic. Where a normal budget would have an Income section, your Holiday Budget would have a Starting Balance.

This starting balance would still cover each month, only the categories would change. Instead of a paycheck, you would list the areas the spending money would come from, such as a Christmas Club or Savings account (more on Finding Extra Funds coming up in the next section!)

The next section would be Expenses. This would be a list of every conceivable way you would spend money during the holidays. It helps as well to break down some of the categories to give you a better idea of exactly where you need to spend your money, and areas you can cut back on if necessary.

stack of currency, a pen, a Christmas gift buying list

One example of this would be gifts. We all will spend money in this category. But ‘gifts’ can also be a broad term. To most effectively understand where the gifting portion of your budget goes, break it down:

  • Gifts – Immediate Family (spouses, children, parents, grandchildren)
  • Gifts – Extended Family (aunts, uncles, cousins, etc.)
  • Gifts – Friends
  • Gifts – Other (teachers, neighbors, pastors, tips, etc.)

This may be the year we want to ‘go all out’ for a spouse or child. But in order to do that, we either need to save separately for this gift, or cut back in other areas. When money is tight, some families choose to do a name drawing for gifts. This way, you only have to buy for one person, rather than every extended family member with whom you celebrate Christmas.

Other line items in your Holiday Budget are some of those ‘hidden’ expenses. And these aren’t just about that cute snowman ornament or having lunch while shopping. Do you ever drop a dollar in the Salvation Army’s red bucket? Do you send charitable contributions to organizations who prepare food baskets for the hungry? Do you give a small child a little cash so they can buy gifts for their friends, parents, or siblings?

red Christmas ornaments and a donation can sitting in snow

All of these expenditures take money to do, but we don’t always consider them as holiday expenses. When you are on a tight budget to begin with, every dollar counts. That doesn’t mean you can’t be generous and contribute to your favorite charity. It just means knowing this is one place your holiday spending money will go.

Travel should be another entry under the Expense column. A few of us spend our holidays in a different city and or state, which means we will have travel costs. Even if we are only driving a couple of hours, we still have to pay for gasoline, possibly meals while traveling, and in some cases, hotel accommodations. Travel expenses can add up in a hurry, so it’s smart to budget for them.

Food is another expensive category. Not only are we buying the supplies for a main holiday meal, but we also need a dish to take to a function, bake cupcakes for a school event, or bake cookies to take to the neighbors.

Christmas dinner with green beans, turkey, cranberry sauce

Food is also a great category where you can cut back on expenses. Instead of buying a pre-made cake or cookie tray, bake them yourself. Rather than being on the hook for every item on the family holiday table, ask others to contribute.

And start your ‘grocery shopping’ at home. Check your pantry, freezer, and refrigerator for items you can use to create a wonderful food contribution without having to spend a tremendous amount at the store. If you do still have to grocery shop, check out the sales before you go, and look for print or online coupons, sales circulars, and store apps that may have digital coupons you can use.

There are chances that a gift you want to give also includes food – such as in the case of a food basket, or a loaf of Strawberry Nut Bread for a neighbor. Since many gifts are handmade, it is up to you which category to allocate these funds. For me, I place them in the gift category since that is the intended purpose. Or, if you prefer, you can add a separate category and name it something such as ‘Gifts – Food Items’ and put the expenses for the ingredients in it.

Setting up your holiday budget doesn’t have to be difficult. It’s just a simple matter of knowing exactly how much you have allotted to spend, and where that money is going. And it’s the best way to keep from paying for Christmas long after it’s over.

Finding the Extra Funds for a Holiday Budget

Santa ornament pulling a red sleigh with a roll of currency tied to it

Just because you have Christmas as a line item in your regular household budget doesn’t mean the funds will always be allocated for it. There will be times when our budget is stretched too thin, and the Christmas line item is an easy one to ‘borrow’ from.

One way to offset the borrowing process is to set up a different way to save. Here are three things you can do:

Create a Christmas Club Account*

Santa hat next to blocks that spell out SAVE

This is a short-term account that can be created through some type of financial institution. Although they aren’t as common now, some community banks and credit unions still offer them. A Christmas Club Account usually draws from your paycheck through direct deposit. Depending on when and how you set it up, the deposits usually start in January, and are withdrawn in late November or early December. There are some pros and cons to having a Christmas Club Account.


  • you are setting aside a pre-determined amount that will be available to spend for the holidays
  • depending on the APR, some Christmas Club accounts may pay a slightly higher percentage rate than a regular savings account (please note – in some case, the APR is the same, and may be low – less than 1%)
  • most have no or a very low opening deposit
  • you can deposit as little as $10 a paycheck up to as much as you can comfortably afford
  • it has the benefit of ‘forgotten’ funds
  • at the accepted withdrawal date, you can use these funds any way you choose


  • there may be an early withdrawal penalty (similar to a CD)
  • finding a financial institution that offers them
  • may be a cap on how much you can save
  • may be a minimum on how much you can deposit when opening

Traditional Savings Account*

jar filled with coins tied with a red ribbon

Most financial institutions offer what is called a Passbook Savings account. These can work as a way to save for the holidays. You can either designate the account specifically for the holidays or combine it with your regular savings plan.


  • may have the ability for direct deposit
  • doesn’t have penalties for early withdrawals
  • funds can be accessed at any time


  • may have low interest rates
  • may have a higher opening deposit minimum
  • may have a lower minimum amount to keep it open

High-Yield CD*

Certificate of Deposit, calculator, stack of cash

This can be an effective way to save for the holidays, but also one of the most ‘iffy’. Those ‘ifs’ include:

  • IF you have a significant amount to deposit (there may be a minimum allowable amount)
  • IF the interest rate is equal to or higher than a Traditional Savings or Christmas Club account
  • IF the CD matures in time to use the funds for holiday shopping

The Cash Method

envelope of cash, notebook, pen, reading glasses

One way you can add a little extra base amount to your Holiday Budget is to put small amounts of cash aside. For instance, if you put $1.00 a day in an envelope beginning on January 1, and ending on October 31, you will have $304. If you do this in addition to a Christmas Club Account or Traditional Savings Account, it would be like having a ‘Christmas’ bonus!

 (Here’s a note on the Cash Method: If you don’t already do this, it may only net you $50 or so this year. But you can start it today. If you do this all year, you will have closer to $350 to $365 extra to spend for next year’s holidays!)

As with any type of investment, do your research. You may be able to find an online financial institution that pays better interest, has a lower minimum, and may be a better fit. But please – before investing your money with any institution, make sure they are a legitimate entity and are safe!

*Before you open a Christmas Club or Traditional Savings Account, be sure to talk to the financial institution first and ask the pertinent questions. They will be able to give you all this information and more.

Make Creating a Holiday Budget Simple!

red piggy bank wearing a Santa hat with a Christmas budget list

Creating a holiday budget is just a matter of listing everything out on paper. It helps to use columns to distinguish the categories and the months. But it also means keeping a calculator handy for all the addition and subtraction you will need to do.

However, I have taken all the writing (and writer’s cramp), math (and constant erasures) out of the equation for you with my Holiday Budget Bundle!

Holiday Budget Workbook and a Holiday Budget Excel Spreadsheet

The Holiday Budget Bundle includes a Workbook and a Spreadsheet that work hand-in-hand to help you with creating a holiday budget and sticking with it.

This spreadsheet has a section for your Starting Balance, and where that money is coming from. Next is the Expense section, which lists out all the possible ways you can spend. It’s a perfect way to keep track of your Holiday Budget and keep you from overspending.

Holiday Budget Excel spreadsheet

The best benefit of having a Holiday Budget spreadsheet is you only have to purchase ONE – then you can use it every year.

The Holiday Budget Workbook helps you with your spending. In addition to worksheets to help you plan your gift giving, meal plans, food lists, and more, you will also find an Ingredient Cost Breakdown list to help you know how much those Christmas treats are costing you to bake, plus several recipes for items you can make as gifts.

Are you ready to get started creating a holiday budget? Then begin by getting the Holiday Budget Bundle!

Make Your Holiday Merry and Simple!

red holiday lantern next to green garland and red ornament

Are you ready to make the most of your holidays, but still keep your spending under control? With a Holiday Budget, you can! Then by sticking with it, you may just end up saving money to use for the next year!

Julie Murphree is a blogger, newspaper columnist, and speaker on all things ‘Living a Simple Life on the Farm’. She is the author of \\\'The Farm Wife – Living a Simple Life on the Farm. She and her husband have 60 acres in NW Louisiana where they actively work on living as sustainable as possible.


  1. Super awesome ideas and great for starting early in the year to get the best results on cash saving. I am for sure going to do this next year.
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  2. Gosh, Christmas will be here before we know it, huh? Lots of ideas here! Thanks so much for linking up at the #UnlimitedLinkParty 125. Pinned.

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