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How to create a Christmas budget

With Christmas on the way, it’s important to keep track of your money and avoid the temptation to overspend.

A Christmas budget is a good place to start. This way you can make sure you’ve got the necessities covered and hopefully reduce any stress.

Here’s how to create a budget:

1. Look at what you can afford to spend

Before you start stocking up, take time to review your finances. Look at your outgoings vs your income – plus any savings you may have set aside for Christmas. This can help you see how much you have spare for food and gifts. 

You may find areas where you could cut back on your spending for the holiday period.

Explore: How to create a budget

2. Make a list of what you need

Deciding what you need can be a useful way to make sure the essentials aren’t forgotten. You could split everything into categories, such as:

  • food

  • gifts and wrapping paper

  • Christmas tree and decorations

  • activities

Then assign a spending limit to each category. You could try breaking this down even further – by meal or recipient of gift, for example.

It can also be useful to prioritise your list so you buy the most important items before your budget runs out. If you have any leftover money, you could save it for Christmas next year, or another savings goal.

3. Look at ways you can cover the cost

If you’re not going to be able to cover the cost with your existing budget, you may need to revisit your list and look at where you can cut back further. Alternatively, you may be able to dip into savings or use credit.

Dipping into any savings you have means you might not need to borrow money. You can then set out a plan to rebuild your savings. Only use your savings if you feel comfortable doing so. It’s important to check the terms of your savings account too, as you may lose interest if you access your savings early.

If you don’t have enough money available, you could consider borrowing. Using a credit card may help cover the initial outlay, for example, but try to only spend what you can afford to repay. And make a plan to pay off anything you borrow as soon as you can. You may be charged interest if you don’t pay your credit card balance in full each month.

Explore: How to avoid credit card charges 

4. Start your shopping early

Starting your shopping early can give you a better chance of finding all your gifts for the price you’ve budgeted for. Leaving things until the last minute could mean you’re stuck scrambling for presents and have to spend more than you’d like to.

Plus, starting early can help you spread the cost of gifts and other bits over a few pay days – if that’s what you’ve planned for in your budget.  

Explore: How to shop safely at Christmas

5. Look out for sales and offers

Some retailers have sales in the run up to Christmas Day, or have offers on bulk buying gifts. It pays to take some time to see what offers are on, especially if you’re planning to buy from specific shops. You may be able to bag yourself a bargain and save a little in your budget to be used on something else.

It’s also useful to look at food offers in the lead up to Christmas Day. Are there items you could buy now and freeze? Or, can you place a Christmas food order so you know exactly how much you’re going to spend on food on the day?

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6. Plan for next year

It’s never too early to start planning for next year’s Christmas and you could use the budget you’ve set out this year as a guide. Saving things like wrapping paper and gift bags to use next year can also help you cut down on some costs. 

You may want to open a savings account and add a little each month to help cover the cost.

Explore: How to save money