According to a Wharton Women report, Americans spend more on Christmas than any other country. We also put ourselves more in debt for the holidays than any other country. While it’s natural to want to create a “perfect” holiday season, taking Christmas debt into 2024 is a tough way to start out the new year.
There’s no one-size-fits-all answer to the question of how much a household should spend on Christmas. However, Dave Ramsey’s Ramsey Solutions blog offers an easy formula for figuring out what works for you and your household budget.
Step 1: Make a list
Make a list of anything you plan to buy for Christmas, including food, travel, decorations, and gifts. Consider your plans for the holiday when you’re making this list, and try to include all of your expenses (including tips for service people and gas for your holiday road trip). You don’t have to assign a dollar amount to any of these categories just yet.
Step 2: Add Christmas to your budget
Whether you use a budgeting app, or have written your budget out in an old-school notebook, add a “holidays” category. Ideally, you’ll do this early in the year so you can plan for it, but if you didn’t, that’s okay. It’s a good tip to keep in mind for 2024.
Step 3: Figure out how much you have available
To avoid going into debt, figure out how much you have, including:
- Any money you’ve saved up for Christmas throughout the year.
- Money you have left over at the end of the month after bills have been paid and your savings account has been padded. While you’re figuring out how much you have left over at the end of the month, remember to leave any money you’ll need to carry over into the next month in checking.
Step 4: Assign a dollar amount
Using the list you created in the first step, give every cost a dollar amount.
Let’s say you have $900 that can go toward Christmas. Assign every dollar to a category. It’s okay if you have to move things around a bit later. The idea is to know exactly how much you’re working with. If you create a table like this one, it’ll be easier to keep track of how much you’ve spent and what’s left over.
| Spending category | Amount budgeted | Amount remaining |
|---|---|---|
| Food | $150 | $0 |
| New lights for front porch | $50 | $15 |
| Gasoline for trip to Aunt Kay’s | $100 | $20 |
| Logan | $100 | $0 |
| Marlee | $75 | $15 |
| Kate | $100 | $12 |
| Maura | $100 | $0 |
| Spencer | $50 | $10 |
| Charley | $50 | $0 |
| BFF | $25 | $0 |
| Supplies to make teacher’s gifts | $25 | $0 |
| Tips for dog walker, babysitter, and hair stylist | $75 | $0 |
| TOTAL | $900 | $72 |
In this scenario, $50 was budgeted for new lights for the front porch. If the lights end up costing $35 instead, mark $15 in the “amount remaining” column. That’s $15 that you can move to another category if you need extra money there.
Once you know how much you can spend without going into debt, check out a shopping app that will help you identify where you can find the steepest discounts online and in your area. In this scenario, you’ve ended up with $72 left from your original $900 budgeted — that’s $72 that can be put toward other expenses, and you emerge from the holiday season without debt.
How does budgeting this way help?
The goal is to get through Christmas without taking on new debt. If you’re concerned that your children won’t find Christmas magical without tons of toys under the tree, you’re setting yourself up for financial stress. Children feed off the energy of the adults in their lives, and if you’re excited about the holiday, they will be too.
And if you find yourself using Christmas (and giving gifts) as a chance to show off, just don’t. Impressing other people does not feel nearly as good as enjoying the holidays without breaking the bank.
In the meantime, make it easy on yourself next year by putting a little away each week for the holidays. For example, putting $20 a week in a Christmas fund means you’ll have $1,040 by the end of the year.
