Small family enjoying quiet Christmas at home.

Buying Christmas Gifts On A Budget

Cathie Ericson9-minute read
August 29, 2022

A 2020 survey from the National Retail Foundation shows that consumers are expected to spend record amounts this holiday season, with forecasts predicting a potential growth of more than 5%. And while “shopping therapy” might help ease some of the uncertainty we are feeling right now, it won’t feel good to be hit with bills come January.

That’s a real possibility considering that a survey from WalletHub finds about 40% of people won’t pay off their gift-giving purchases in full by the due date, and that will add to the credit card debt that 41 million Americans say they still have from the 2019 holidays. Financial goals like paying down debt and saving more are frequently listed among New Year's resolution examples, especially after buying gifts for the holidays – but the good news is you can get started today by gift giving on a budget from the start.

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How To Budget For Christmas Presents

Don’t overspend this holiday season: budgeting for Christmas gifts starts with making a zero-based Christmas budget with categories for each recipient and the amount you have to spend, then tracking along the way, making sure not to forget extras like decorations and entertaining. We’ll walk you through it here.

As we all know, this holiday season is different from any other, and that definitely includes Christmas shopping. Like many, your household incomes may have been affected by COVID-19 or on the flip side, you might be tempted to spend more because you aren’t spending in other categories, like travel or entertainment.

However, just because you’re saving money in one area doesn’t mean you should spend it in another – if you have a better use for it, like saving for a down payment, retirement, or other goal. It can be tempting to shower your kids with presents, but remember that just like Santa, they are watching. You want to make sure you are setting a good example fiscally, and one way to start is by using this as a chance to teach your kids about holiday finances.

Here’s a guide to budgeting for Christmas presents that won’t leave you regretting your spending come 2021.

1. Make A Budget

Hopefully you have a good handle on your general budget, which will allow you to know how much money you have to budget for Christmas shopping. (If you haven’t focused on creating a budget for yourself, there’s no time like the “present” to see where you have excess funds you can spend on those gifts. And it will be a gift that keeps on giving for you throughout 2021.) Using a budgeting app can make it easier and more fun.

2. Set A Gift Limit

Write down everyone you need to shop for and a rough idea of what you want to spend per person. Then add it all up and see how it looks. Is your budget busted? Now is the time to figure out how to reallocate your gifting dollars before you buy a single present. Limiting the number of gifts per loved one can help you stick to your budget – or you can find out if they’d prefer one big item rather than lots of smaller ones.

While it’s fun to surprise your family with the perfect gift, sometimes it’s also helpful to know what’s most meaningful for them. This ensure you are spending your holiday gift budget in a way that will bring the most joy to the recipient.

And of course a huge part of sticking to a budget is tracking it on an ongoing basis; it’s all too easy to overspend because you forgot what you’d already bought or because you keep seeing the perfect gift. That’s why having a plan can help direct your shopping so you avoid overspending.

3. Save Where You Can

We all want to save a buck, and the holiday season is the ideal opportunity as retailers go all out to grab your attention. Here are a few ways you can make your dollar go farther:

  • Subscribe to a store’s email list for discounts and more. Often when you sign up, you get an extra bonus, so make sure to opt in when they offer it.
  • Compare prices online to find the best deal. Using your device while you’re at the mall can uncover even more savings; you might find a better deal at another store or find a wider selection at the store’s website than its physical location. Free shipping or other extra perks can seal the deal.
  • Use apps to save even more. Websites like ibotta and Honey can help identify sales and coupons when you use them for your online shopping.
  • Utilize cash-back credit cards. Do your research to find a credit card that rewards you for shopping, but remember, you won’t be saving money if you don’t pay it off in full. You don’t want increased interest charges to eat up those savings, so only put something on your credit card that you have budgeted for and intend to cover.
  • Save all your receipts. Once you’ve bought something, it’s tempting to cross it off your list and forget about it, but some retailers might have better deals further into the season. Keep a watch on items and don’t hesitate to ask for a credit if the price goes down.
  • Buy cheaper wrapping paper at a dollar store or another less expensive shop. Remember that all these “extras” can add up, so don’t spend more on the presentation than the present. If you have kids, enlist them to help decorate the boxes or use plain paper for personalized gift wrap that doesn’t cost a dime.
  • Don’t reallocate money that you’ve saved. If you find an unexpected deal that drops Aunt Mary’s gift down to half of what you had planned to spend, don’t overcompensate by buying twice as much. Smile and pocket the savings.

4. Plan To Shop When A Sale Is Happening

Retailers are wooing shoppers like never before so pay close attention to when you can get the best price. While Black Friday (the Friday after Thanksgiving) and Cyber Monday (the following Monday) have traditionally been days with the biggest discounts – but don’t worry if you missed them this year – retailers are bound to have prices cuts and discounts throughout the season. If you have your eye on a particular item, check back frequently to see if it’s had a drop. You also can enlist an app like CamelCamelCamel or Keepa that can chart price history to let you know when something is a deal.

5. Cover The Budget By Picking Up A Side Hustle

Want to make sure you’re not racking up debt with your holiday expenditures? Working a second job can help supplement your income for the holiday seasons. Many “elves” take shifts at the mall or with a delivery company this time of year to earn some extra cash, but there are a number of side hustles you can do from home to help your budgeting for Christmas. Some that work well in the holiday season are:

  • Babysitting
  • Personal shopping
  • Running errands, like standing in line at the post office or making returns
  • Taking holiday card photographs
  • Hanging lights and other outdoor decorations
  • Selling items in your closet
  • Tutoring while kids are on break

Remember to make sure you are following all COVID-19 protocols when taking on a second job this year.

6. Decide Which Holiday Traditions You Can Skip

Looking for more Christmas on a budget ideas? The good news is that some holiday traditions that might have been former budget busters are off limits, due to COVID-19, such as holiday travel to see relatives or even skiing and other trips you might usually take. And avoiding some traditions might even bring a sigh of relief as you realize you don’t have to get dressed up and sit through the Nutcracker or wait in long lines to see Santa and then buy the overpriced photos, not to mention the Christmas shopping that inevitably follows.

You also might want to rethink Christmas cards, which can get expensive once you factor in printing and postage – instead, you can send emailed greetings.

Decorating can also eat up a huge chunk of budget. Use the lights from last year rather than buying new ones. You also could consider an artificial tree that you can use every year rather than spending big bucks on a Christmas tree that will be out with the recycling come January.

Removing these types of “extra” items can help you realize how to budget for Christmas presents as painlessly as possible. Or, if you do keep them, just make sure they’re part of your budget as they can add up fast.

7. Suggest An Alternative To Gift-Giving

Want to show people you care without buying something they don’t want or need? If you are stuck coming up with an idea for Christmas gifts on a budget for a particular person, that’s a clue you might not need to buy them “something” after all. Here are some ways you can save money by cutting down your list, while still celebrating loved ones.

  • Treat everyone to a holiday dinner in lieu of gifts. This can work especially well if you are able to be outside and socially distanced.
  • Engage in a shared experience with your family and loved ones. Have fun watching a holiday movie together – either in person or over Zoom. You even could get together with neighbors and project a film on a garage door and do a “drive-in” movie. Or you could bundle up and go on a light walk or find a drive-through light experience.
  • Play Secret Santa. You can set a price limit or give everyone a fun “theme” like puzzles, tree ornaments, or hats that will naturally keep the cost low. Tell your family or friend group early that you plan to do this and knock lots of gifts off your list at once.
  • Make gifts. Share your own creative gift, whether it’s painting pottery, knitting, making cards, or baking treats.
  • Do a family gift. If you typically buy for aunts, uncles, and cousins, make it a family gift that will be less costly overall, such as a game, book, or gift card for a treat at a local ice cream shop.

8. Consider A More Thoughtful Gift

Of course, gifts don’t have to cost money. Often the best gifts are the ones that come from the heart. Here are some easy ideas:

  • Volunteer to drop off a latte every Monday for a month to a neighbor who’s working remotely.
  • Scan recipes and make a cookbook for an elderly aunt.
  • Do grocery shopping for a busy mom.
  • Make a photo album with old family photos or memories of trips you’ve taken with a good friend.

Gift-Giving Ideas For A Christmas On A Budget

Not sure where to start? Here are five gift ideas for gift giving on a budget that are perfect for this year.

Subscription To An “Of The Month” Club

Whether your recipient likes socks, sweets, or cheese, there’s an “of the month” club to suit every fancy, from practical to whimsical. The bonus of these gifts is that the cost is spread out so you don’t take a big hit all at once.

Donation To A favorite cause

At this time of year, the best thing to buy for the person who has everything is nothing and instead make a donation to a group that can use it. The key here is to make sure the funds go to something that’s meaningful to the recipient, not just to you.

Upscale Version Of An Everyday Item

Fabulous gifts are those that you would never buy for yourself. If they crave chocolate, buy the most beautiful gourmet truffles you can find. If they love a scented candle, buy a luxury brand with three wicks. Someone who watches a lot of TV might appreciate a cashmere throw to cuddle under. The goal is to buy the recipient something you know they’ll like, but make it a little more decadent so even a small item looks special.

Kitchen Accessories

As we spend more time at home, many people have perfected their cooking skills, and sometimes there’s an ideal gadget that would make the preparation easier or tastier. For example you could get them a smoothie maker, air fryer, or a milk frother for coffee-shop-worthy sips at home. Many stores have fantastic deals on kitchen extras right now.

Art Supplies

Kids’ gifts can get expensive, and often get ignored once the holidays are over. But every kid (and parent!) will appreciate art supplies that can encourage creativity and individual play. Whether you get sidewalk chalk, paints, or just a fresh set of perfectly sharpened crayons and some art paper, these gifts are affordable and useful.

Bottom Line

As you look ahead to your holiday shopping, remember that it really is the thought that counts, and your budget will appreciate it come January. Hopefully these tips will help you consider more thoughtful gifts and ways to save on everything you need to buy. Need some more inspiration? Look ahead to how to keep New Year’s resolutions and feel proud you’ve gotten a jump start!

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Cathie Ericson

Cathie Ericson writes about personal finance, real estate, small business, education, retail/ecommerce and other topics for a host of brands and websites. Her work has been featured on major media websites, including U.S. News & World Report, Forbes, Business Insider, The Oregonian, Industry Dive, Boston Globe, CNBC,, and Yahoo Finance, among many others. Find her