Tips to Create the Best Budget for Christmas

So Christmas is around the corner. You want to have the best budget for Christmas, and just can’t wait for Christmas budget planning. 

Well, the very first thing I want you to do is sit tight and determine how much cash you could spend on Christmas based on your income. People make a list of how much they could spend and on what things, but rarely do they perform a ratio analysis between their earnings and expenses. Be different, and more importantly, be sure to factor in your earning ability in relation to all of your holiday expenses, including gifts, food, decorations, and travel.

The next step

Alright, so you have defined your ability to spend, and thereby have made sure that you are not going to go beyond your limits this Christmas, right? Like always, the first step is always the most difficult, but that doesn’t mean the next steps would be easier. The very next step here is to create a realistic budget. The reason I am calling it realistic is people often don’t accurately define what their “limits” are. 

What makes setting a budget difficult is being realistic about the “limits”. It has been found in studies that even after defining their spending ability, people still fail to have a realistic idea of spending during the holidays, and that makes the whole thing messy. 

They must understand that Christmas expenses come in every shape and size. And not every size is for everyone. To create the best budget for Christmas, the ratio between their earnings and their holiday spending must be a realistic one. That’s only possible when they have a realistic idea of their “limits.”

Budget and money allocation

Okay, so you are onto Christmas budget planning, and you are a hardcore relist when it comes to determining your expenses. But aren’t you making the mistake that many people unknowingly make? The mistake I am talking about is improper and inefficient allocation of money.

The four main spendings of Christmas are 

  • Decoration
  • Gifts
  • Food
  • Travel/outings

They are all important spendings during Christmas, but are they equally important? The answer is No. Travel can be skipped, in fact, during the Covid-19, when people had to stay at home, no one traveled anywhere, yet many enjoyed Christmas to the fullest. Decoration, on the other hand, is a necessary Christmas spending. Take away the Pine tree adorned with lights, and what’s left of the grand celebration?

How much money should you allocate to food? Depends on your guest list. If it’s only the family members, then you could prepare delicious meals at home, and significantly lower your expenses. But if guests are coming, then you might have to order from a restaurant, which means more money must be allocated to food. Similarly, if you are into home decoration, and you think guests might find a cheap decoration off-putting, you have no other way than to allocate more money to house decoration. It’s all about which needs are your priorities. That should dictate your budget allocation, and not the other way.

Stick to your budget

Those with the tendency to overspend pay attention. Even if you have the best budget for Christmas, there’s no point if you don’t stick to it. So, make a pledge today that you’ll stick to your budget, no matter what. There are two important things to consider when you decide to stick to your budget. One is impulse control, and the other is prior planning. Both are important.

Impulse control becomes easy when you avoid luxury stores in the holiday season. It might sound counterintuitive, especially when brands throw fabulous sales offers and discounts at this time of the year, but bear in mind it’s all a ploy to make you go overboard and spend beyond the amount you allotted. So, be a little thrifty. I am not telling you to avoid brand showrooms completely, I am telling you to take over the reins of your impulse to buy stuff that you are not sure of.

Impulse control becomes especially easier when you plan everything in advance and make a list. It’s like having a superpower that always keeps your overspending impulses in chains. If you have planned before and churned out a list of stuff that you are going to buy this Christmas, all you need to do is just stay true to the list. That’s all. So easy, yet so difficult, isn’t it?

Tracking all your expenses

And I mean it. Every single dime you spend. Track everything. One reason behind overspending during Christmas is not tracking expenses. Small expenses accrue and become large expenses. Finally, when these expenses start burning the pockets, people realize. A study done in 2022 shows families around the world spend over 150% of their monthly income during Christmas. You think they’d have done the same had they tracked each and every expense? The answer is a resounding No. 

Creating a realistic budget, allocating the right amount of money to decor, gifts, and other things, and sticking to the budget – everything becomes irrelevant if you don’t track your expenses. Hence, make it your priority. 


Follow the tips shared here in this article, and see how easy creating the best budget for Christmas gets. Enjoy this Christmas with your family and friends, without hurting your wallet. Isn’t that what we all want?

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