6 Ways To Financially Prepare For Christmas

Christmas comes at the same time every year, but for some reason, we’re never financially ready. It seems to sneak up on some of us and our budget. Then January rolls around, and there are more bills than money, and we’re left with a Christmas financial hangover.

There are some things we can do, though, to make sure we have our finances in order and we don’t overspend, creating unnecessary new debt and putting us behind on our financial goals before the new year even starts.

(I am not a financial expert. All information is based on my own personal experience and research. This information is not meant to be financial advice and is just for educational purposes. This post includes some affiliate links. Should you click an affiliate link and make a purchase, I may receive a small commission at no extra cost to you.)

Related read: How To Create A Monthly Budget For Your Household

Set a budget

Yes, I know I talk about budgets a lot, but they are really helpful when it comes to knowing what we have to spend and keeping track of that spending.

To prepare for your Christmas spending, it’s helpful to look at your overall budget and figure out what you have available to spend or can save to spend on Christmas gifts, meals, and decor. Once you have that number, put it in your budget and make sure to track it over time.

By doing this, you won’t need to go into debt to pay for anything Christmas-related or feel tempted to dip into your emergency fund. Paying for Christmas is not an emergency. I’ll say it again for everyone in the back - Paying for Christmas is not an emergency!

Create a sinking fund

If you need to save up money for Christmas because you can’t cashflow it with your December income, setting up a sinking fund can help. A sinking fund is a set amount of money that is saved regularly and set aside for expected and planned non-typical purchases.

The sooner you get started on your sinking fund, the more money you can have saved up. You can save up every month or per paycheck. Once you determine the savings frequency, you need to determine how much you need to save each paycheck or month. The formula for this is the total amount you need to save divided by the number of months or paychecks you have left until Christmas.

Create a gift list

Now that you know how much you can spend, it’s time to create your gift list. How many gifts are you buying, and who are you buying gifts for?

I don’t buy a lot of gifts. Mostly for my nephew and niece, and if I decide to participate in a gift exchange among my friends or co-workers. This helps me to keep my budget low and stay within it.

Related read: 7 Tips For Christmas Gift Shopping On A Budget

Price out the gifts

Having a list of gifts to buy is not where you should stop. Pricing out the gifts is just as important because you need to know if all of the gifts will fit within your budget, and you won’t be surprised by the final cost.

Getting prices for your gifts also allows you to determine if you need to cut back on gift-giving this year, as well as whether you have extra money in the budget to buy decorations and meals.

Start shopping sales

If you can avoid buying items at full price, do it! You have your gift list, so you can use shopping browser extensions like Rakuten and Honey to help you find better deals on the items you’re shopping for.

Many sales happen throughout the year. Amazon tends to have a couple of Prime Day sales, and during that time, several other retailers have their own version of Prime Day. If you're looking for beauty gifts, stores like Ulta and Sephora have sales where you can get beauty items 30-50% off. 

Track spending

The goal here is not to go over budget, so track your purchases, get and keep receipts. Track the purchases against your set budget, and if it looks like you’re starting to go over budget, start making adjustments.

These adjustments could be anything from finding more sales and deals to shop, returning some items, and buying lower-priced options

Bonus tips

Earn more money: If you think you may go over budget or not have enough, find ways to earn more money. You can get a seasonal part-time job, pick up extra shifts at work, or sell things.

Related read: How To Earn Money With Your Cell Phone

Regift: That’s not always a bad thing. There may be items you were given as gifts or for free that have never been used and could make great gifts for people on your list.

Buy used decorations: Your Christmas decorations don’t need to be brand new. You can find used decorations in good condition on Facebook Marketplace or at yard sales.

Do a decorations swap: If you have friends who like to decorate for Christmas, you can swap decorations with them and mix them in to give your decor a new look.