How To Budget And Avoid Debt For Christmas

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Do you think it is possible to have fun and avoid debt for Christmas? The answer is yes, and I’m going to show you how. 

Want to watch the video version of this post? Check it out here!

Holidays tend to be the time of year that people start to get depressed, especially if they don’t have a lot of money.

Thanksgiving, Christmas, and the new year are all within a month of each other. 

Three holidays so close together can be overwhelming if you don’t plan carefully, so I’m going to show you how to budget and avoid debt for Christmas.

Want to watch the video version of this blog post? Check it out here:

Why do people overspend for Christmas?

Christmas is a time for you to spend time with your family members and show them that you love them. 

More often than not, we show our love through food and Christmas gifts. There are also holiday gatherings and travel, and that makes it so easy to overspend for Christmas.

According to NerdWallet, 51% of all Americans admit fo overspending on holiday gifts. 

A few reasons why the average American overspends for Christmas are procrastination, impulse purchases, emotions, and shopping without a list. 

Have you overspent for any of these reasons in the past? I know I have. This year, I want you to look at Christmas differently and avoid going into debt for the holidays.

Why should you avoid debt for Christmas?

Finances are stressful enough, especially if you’re in debt. Going into debt for Christmas is something that you can and should avoid.

Think about it this way. It takes an average of three and a half months to pay off debt incurred during the Christmas season. 

In addition to this, twenty-eight percent of people that paid for Christmas items with a credit card last year are still paying them off today

Almost a whole year later! There is no way to predict what will happen during the upcoming year that may prevent you from paying back this debt promptly. 

A bit of planning, thinking out of the box, and organization can help you avoid taking on debt for Christmas and feel a whole lot better going into the new year.

How To Budget And Avoid Debt For Christmas
Photo Credit: Pixabay

How to stay within your budget for the holidays?

The number one way to avoid debt for Christmas is to create a budget and stick to it. 

This budget should be separate from your regular monthly budget. The reason is that your monthly bills and regular expenses still need to be paid during the holiday season.

To create a Christmas budget, you need to know exactly how much money you can realistically spend. This total does not include money from credit cards or loans because the goal is to avoid going into debt for Christmas.

Once you have your budget amount, you need to figure out your Christmas plans. 

Are you planning to travel and attend gatherings? Will you be hosting a party or event? How many people are on your gift list? Once you figure out a tentative plan, it’s time to prioritize. 

Make a list of the things that you are planning to do for Christmas in order of importance. Start with the things that you need to do, then move on to the things that you want to do.

Categories to include in a Christmas budget

Creating a budget for Christmas can be a bit challenging. You don’t want to add too many things, but you don’t want to miss anything important. We are going to go over a few categories that a reasonable Christmas budget includes. 


The first category we will talk about is the gift category. You will need to determine the total amount you can afford to spend on gifts. I know Christmas is a time for giving, but don’t forget that you can show someone that you love them without spending a ton of money on them. 

Get creative and make a few gifts or spend quality time with your family members if your budget is tight. Just don’t take on any new debt, especially for gifts.


Are you hosting family and friends for Christmas? Will you be attending any potlucks? Think about the things that require you to provide food during the holidays and create a spending limit. 

Make sure that you create a shopping list before going to the grocery store and stick to it while shopping. Shop at wholesale stores like Costco or discount stores like Aldi to save a bit of money on your food costs as well. 


If you’re anything like me, you like to travel during the holidays. Travel can get expensive, especially this time of year. Since we are going to avoid debt for Christmas this year, you will only plan to travel if you can afford it without going into credit card debt. 

Factor things like tickets, gas, Uber, and hotel costs into the travel budget. This category will help you plan the most efficient trip possible and stay debt-free for Christmas.


Christmas time is full of activities. If you’re planning on attending any events during the holidays, make sure to include the cost in your budget. 

Don’t forget to add in the price of tickets and refreshments while planning for your Christmas events. 

Things in each of these categories can get pretty expensive, so make sure you’re paying attention to your overall budget while dividing the money into these categories.

How To Budget And Avoid Debt For Christmas
Photo Credit: Pixabay

Sample Christmas budget

I know it may sound a bit confusing, so take a look at the sample budget provided below. 

If you’re interested in the worksheet, you can find it in the Debt Free Christmas Workbook in my free resource library.

Christmas Budget

This budget includes things that are important to this person. The money is divided based on their priorities, and as long as they stick to it, they will have a debt-free Christmas.

Additional tips to avoid debt for Christmas

Now that you have your Christmas budget created, I want to share a few more tips to help you avoid holiday debt.

  • Take your list and your budget with you when shopping for food and gifts. Make sure to stay within your budget or cut something another category if you find yourself going over budget.
  • Don’t get caught up in sales. Just because something is on sale doesn’t mean you need to purchase it. Stick to your gift list and your grocery list. Sales will always come around again.
  • Use cash or gift cards to help you stick to your budget. Take only the amount of cash or gift cards that you need when shopping. When the money is gone, it’s gone. Spending only cash or gift cards will cut down on impulse purchases and overspending.
  • Get creative. Use wrapping paper and gift bags from the dollar store. Another option is to come up with a few inexpensive gifts you can make yourself. Most of the time, these gifts mean more than expensive gifts.

The Bottom Line

Christmas is approaching quickly, but it’s not too late to get started with your budget. This year I want you to enjoy your family without being stressed about money. 

When you create your Christmas budget and prioritize your holiday spending, you’re ahead of the game. 

Christmas shopping and buying gifts will be so easy because you have a plan, and you know what you can spend on each category.

Stick to the budget and make adjustments when necessary. Then sit back and relax with your family.

Let me know how you plan to enjoy your Christmas holidays without creating new debt in the comments.

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Holidays tend to be the time of year that people start to get depressed, especially if they don’t have a lot of money. Check out this post to learn how to budget and avoid debt for Christmas

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