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Creating Your Christmas Budget - TICKET TO FI

Creating Your Christmas Budget

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Christmas Budget - Ticket to FI

Christmas is just around the corner which means it’s time to set up your Christmas Budget. We know how easy it can be to spend more than you have but with a budget in place you will be able to get gifts they love with money you have.

In all honesty, Nate and I both LOVE Christmas. Both of us have moms that love Christmas and decorate beyond your wildest dreams. And in the past 5 years, I’ve finally started to understand my mom’s excitement for Christmas. Getting the perfect gift for a loved one is the BEST feeling. The anticipation from when you buy it, building up as they pick up the present under the tree, and all leading up to their face of pure joy or shock. It’s a feeling like no other.

And although we are on a journey towards financial independence, giving gifts is one of those things we love and will never “squeeze out of our budget.” We just need to find a balanced budget for it.

And honestly, if Nate and I had all the money we could ever want, we would be buying some pretty spectacular gifts. I won’t mention them here because Mom reads this and I don’t want to spoil any future surprises.

Because we both could just go crazy with Christmas gifts, as I am sure most parents can relate to, we need to set a Christmas Budget for ourselves. Here are the three questions you need to ask yourself (and your loved ones) so you can set your own Christmas Budget.

1. Who’s on your Christmas List?

This happens to me every year: a week before Christmas and someone brings up the work Christmas party or a cousin’s new girlfriend, and I have purchased nothing. I have to run to the store in the thick of Christmas traffic (a completely real thing in San Diego) and buy a gift I could have purchased a month ago for probably half of what I bought it for.

In order to hopefully prevent all that last-minute shopping and stress, look back to last year’s list to help jog your memory for this year’s list.

If you tracked your expenses last year, you can simply look through last year’s expenses (think October – December) and find all the Christmas related expenses. We have a separate line item to track all our gifts named “Christmas Gifts.”

If you didn’t, it’s time to start reminiscing, maybe put on some holiday music to put you in the mood. You can look through your calendar for Christmas parties you went to. Remember back if there was a potluck, Secret Santa, or White Elephant exchanges at each. Maybe look through photos if you don’t have all the invites on your calendar.

And then be sure to go through all the family members that were at the holiday gatherings. Did you buy something for your boss, co-workers, landlord, neighbors, landscaper, etc.?

Here’s our list from last year and there are some definite changes to the list this year!


  • Parents
  • Brother & Sister In-Law
  • Nephews (x5)
  • Boss
  • Co-Workers (x4)
  • Work Secret Santa
  • Work White Elephant
  • Entire Team at Work


  • Parents
  • Brother
  • Grandparents (x4)
  • Family White Elephant
  • Friends’ White Elephant
  • Boss
  • Co-Workers (x2)
  • Work Secret Santa
  • Work White Elephant (x2)

Note: we do NOT buy each other gifts.

A) I get too stressed out buying Nate a good gift because he is the best gift-giver ever.

B) We see all of each other’s finances so it wouldn’t be much of a surprise.

C) We just agreed we don’t really need gifts from each other. That may change, but for now, we are both happy with that decision. If buying gifts for each other is important to you then please don’t change that! Just add it to the budget.

Now, don’t forget that there may be new parties this year or new family members (kids, in-laws, new-found cousins, etc.)!

And we can go ahead and categorize Holiday Cards in gifts as well. You will need to add the expenses to make, order, and send Holiday Cards if that is something that is important to you!

2. Do I Have Any Non-Gift Categories?

Once you have a full list of who you will be buying gifts for this year, it’s time to check your other non-gift categories!

Gift Wrap

Time to pull out that gift wrap box. I know you have one, everyone does. Will you need to buy more wrapping paper, gift tags, bows, or cards? All these expenses can really add up if you aren’t careful! Just be sure to shop at the Dollar Store or get together with friends to wrap together!


And in the case of both our moms, will you be buying any more Christmas Decorations? We bought our fake Christmas tree last year that we will be keeping for years to come, but it was a rather large expense. So take a look to see if you are wanting to purchase any more decorations for the holidays.


The holidays naturally bring out tons of great donation opportunities whether it is buying Christmas gifts for children in need or donating to a homeless shelter so they can prepare a holiday meal. We all want to be able to give back to our community and the holidays are a wonderful time for that. Just be sure to factor this into your Christmas budget so you can set aside the necessary money for it!

3. What Can I Afford?

Now it’s time to start looking at the finances of all of your categories. Hopefully, you have some numbers from last year to help guide the budget, but if not, you can just as well go through each category and start with a rough estimate of each person or party.

Remember, you will still have all your regular expenses in December. Rent is still due, the heat will still need to be turned on, and groceries won’t magically appear for dinner.

You may not be able to afford to cash flow all of your Christmas expenses but you can plan ahead and save into a Sinking Fund. Check out our Sinking Fund Tracker in the Free Resource Library to help organize your spending and saving for Christmas!

This is how my mom has always paid for Christmas. She saves a certain amount of money from each paycheck to a separate checking account, just for Christmas. Then when she starts buying Christmas gifts, all the charges will get paid from that account.

Mind you, she taught me to do this well before I even knew Sinking Funds existed. And it is proof that it works. She never has to worry about her Christmas budget and never has to worry about trying to cash flow all her Christmas spending at one time.

Take a look at what you are able to set aside with each paycheck from now until Christmas (keeping in mind you will need to purchase gifts well before Christmas Day).

What can you honestly afford?

Set Your Christmas Budget

Now combining your answers to all the questions above, it’s time to set your Christmas Budget.

Use last year’s numbers as a starting point and hone in on your number for this year. Were you comfortable with what you spent? Did you feel stretched? Did you have to take on debt?

How much do you already have saved? How much extra can you save between now and the time you shop?

Find a number that is comfortable for you to spend. You’re either going to have to cash flow this or save enough prior to them. You are not allowed to go into debt for Christmas. Repeat after me.


We set a budget for our overall spending for Christmas and then broke it down into categories: gifts (family, friends, work), donations, decorations, etc. This will help us keep a closer eye on each of the categories allowing us to flex spending when and where necessary.

Here is our current Christmas Budget, although certainly subject to change.

Total Budget : $920

  • Nate’s Family: $300
  • Alicia’s Family: $300
  • Nate’s Work: $220
  • Donations: $100

Categories we won’t have this year that we had last year are Alicia’s Work, Friends Get-togethers, Decorations, and Gift Wrap. We’re going to try to be a bit more scrappy with our gift wrap this year and not only have less to purchase but less waste, too!

Start Shopping

Now that you have your budget, it’s time to brainstorm gift ideas within the confines of that budget and starting shopping for them!

If you have a great gift idea and it is out of your budget range, you should start bargain hunting by looking for price match opportunities or waiting for sales around Black Friday. Or you may need to compromise on the exact brand, model, color, etc. that you wanted to buy. The earlier you start your shopping, the more flexible you are to find something perfect for the receiver and perfect for your budget!

So start early, shop around, and check out Etsy for some handmade treasures at reasonable prices!

The worst thing you can do is start shopping too late and have to pay the dreaded convenience fee and miss out on so many great sales! Patience is your best friend.

Merry Christmas and Happy Holidays! (almost)

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About US

Hi all! We are Alicia & Nate. We are couple currently living in San Diego learning and teaching the ropes of all things personal finance. We love dogs, chips, and Friends! Hope to see you around! 

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