How to Save Money for the Holidays (without going into debt)


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saving money for Christmas Middle Class Dad Dad, Mom and child around a Christmas tree

My wife and I used to go broke every holiday season, so we decided to see how to save money for the holidays without going into debt.

Here’s what we learned:

To save money for the holidays without debt, start saving in January. Tally the total expected expenses including travel, gifts, and food and divide that by 11. Save that amount each month from January through November.

The good news is that with just a few minor tweaks in your planning throughout the year, you can have the Christmas of your dreams without the dread of huge credit card bills hitting in January.

In this post, we’re looking all the top Christmas and holiday spending statistics. We’ll discuss how much you should spend on your kid’s presents. And we’ll also talk about some of the easy-to-forget expenses that can creep up on us.

And we’ll talk about the best strategies on saving money on the purchases you know you’ll make.

Specifically, though, we’re looking at the best tips on how to save money for the holidays without going into debt, so you can truly enjoy the holiday season.

Don’t celebrate Christmas?

If your family does ANY holiday gift giving or party throwing in December these saving money for Christmas strategies can still apply and will help your family.

Want an easy and cheap way to spend less the rest of the year so you have more for the holidays?

The app Trim automatically looks at your monthly bills & spending and then cross-checks that with savings programs almost all vendors have. When they match up, you save. They’ll even handle the hassle of canceling memberships you no longer want or renegotiate bills for you like insurance and cable bills.

Just sign up and spend on your Visa card and earn automatic savings back on your statement!

What is the average Christmas budget?

According to Gallup, one of the long-standing premier polling companies in the US, the “average” American family will spend $785 on Christmas this year.

This is consistent with previous years, but down quite a bit from the all-time high of $909 in 2007.

You can see more statistics on Christmas spending on their chart, which shows that while the average that will spend $785 this year, the majority of families actually spend $1000 or more.

saving money for Christmas Middle Class Dad Gallup poll on Christmas spending

What is a Christmas account?

I go deeper into why you not only need a Christmas club savings account but also 4 other bank accounts in a previous post about why you need Multiple Bank Accounts for Budgeting and not just checking and savings.

If you’re going to do Christmas saving right, it’s essential you check out that post for more detail.

A Christmas club savings account sometimes called a Christmas Club, is simply a bank account that is specific for saving money for Christmas.

This program came into effect during the great depression.

Essentially you set money aside every month (or week) into this special savings account. Then in November as it approaches the holiday season, the bank automatically transfers it back into your checking account.

Trust me, it makes learning how to save money for the holidays easy!

Do banks still have Christmas Clubs?

The short answer is yes; many still offer a Christmas club savings account for saving money for Christmas.  My credit union does and that’s what my family uses.

But according to the Credit Union National Association (CUNA), only 9% of people in America use a Christmas club savings account.

They go on to say that about 72% of credit unions still offer them. While some banks also offer them, the credit union is the king of the Christmas club savings account.

So if your bank doesn’t offer one, take a look at your local credit unions.  They likely offer that, along with the personal service that can come with not being a huge multi-national industry.

How can I save money for Christmas all year?

One of the keys to learning how to save money for the holidays, no matter how much you spend, is to start saving for it months in advance; ideally in January.

According to the Statistica, in a recent study, they found that upwards of 66% of people did not save anything for Christmas spending.

In looking specifically at European countries, The Czech Republic dominated, followed closely by the United Kingdom. But even then, the highest percentage that did Christmas saving was only 35%!

So if you’re in that boat, don’t feel bad; you’re in good company!  But I do want to make some suggestions that will set your family up for future financial success!

How can I stay on budget during the holidays?

Every November and December we begin to face some tough choices.

We get party invitations or invited to travel for the holidays. We also can be expected to invest in gift exchanges at work or with family.

Sometimes we’ve known about these things well in advance.

But often, they come out of the blue and sneak up on us. When that happens, we have a tough choice to make. The choice is rooted in the fact that if we’re comitted to not going into debt. When we start to learn how to save money for the holidays, we start planning for that spending in January.

So by November, we’ve already saved and earmarked all our holiday spending money.

If we have every penney allocated, then unexpected expenses just don’t have a place in budget. Ultimately the best strategy when you’re figuring out how much money to save for Christmas would be to pad it for unexpected expenses.

But if you haven’t done that you’ll have to get used to saying no to things that are less important.

Think about it this way. Every time you say yes to one thing, since our resources are finite, you are saying no to something else. So make sure everything you say yes to is at the top of your priority list.

You may dissapoint friends, co-workers, or family, but you’ll feel a whole lot better in January when you don’t have any new credit card bills!

What is a reasonable Christmas budget?

saving money for Christmas Middle Class Dad Astrid and Jolie Campbell with Mr. and Mrs. Claus

The key to anything is simply planning ahead, being consistent, and being intentional with your decisions.

For learning how to save money for the holidays, the good news is that the holidays are consistent.

It happens at the same tome every year, and for the most part, our families all do the same kinds of things, and spend money in the same kinds of ways.

This is what my family does to prepare for Christmas spending:

  1. We plan to spend $1,000 on Christmas spending
  2. We know the majority of that will be spent starting in late November
  3. Thus we divide $1,000 by 11 (months) – that equals $90.90
  4. We set aside $90.90 each month (starting in January and transfer from our checking into our Christmas club savings account (that is one of the 5 bank accounts we have)
  5. That $1,000 includes what we spend on a foster child who’s Santa list we sponsor each year (roughly $100)
  6. That $1,000 also needs to cover extraordinary expenses (such as travel or fancy Christmas grocery items)

The amount your family spends may vary and that’s OK!

You don’t need to spend a fortune, go into debt, or wreck your family’s finances to make your kids happy.

In fact, just the opposite.

When your kids see you saving and spending wisely (and if they still believe in Santa as my kids do, this lesson will come later) you are setting them up for future financial success and ensuring they will win with money!

How much money should I save for Christmas?

Dave Ramsey, the top money expert in America, was asked how much he recommends saving money for Christmas.

Dave came back with the following:

  • The average Christmas spending per family last year was around $800
  • The average household income was around $50,000.
  • If you make $25,000, then you would be half of average, and your whole Christmas budget should be about half of the average, or about $400.
  • If you make $200,000, you could go as high as four times that ($3,200) if you wanted to and still be “reasonable.”

He goes on to say “I’m always of the opinion the adults can fend for themselves. In case of a budget crisis, we should only take care of the children.”  I would agree with all of his opinions, wholeheartedly, but then I am a big Dave Ramsey fan!

One thing that’s important to remember is that it’s not the amount of money you spend on Christmas that makes it special.

Now if you’ve spoiled your kids the last few years to the degree that they now behave like Dudley from the Harry Potter series, you’re going to need more than this blog to turn it around. But I am convinced that any parenting oversights (and we all make them) can be fixed.

Simply being aware of the issues and being intentional and honest about them (with yourselves and your kids) is half the battle.

How many people use credit cards on holiday spending?

In a recent survey by a company called creditdonkey.com, they found that on average, about 37% of families use credit cards to pay for Christmas spending.

I don’t advocate the use of credit cards at all and don’t actually have any in our house.

But I get our way of doing things may not be your way. That’s OK! But I do want you to think about the choices you make regarding debt. I want you to be intentional instead of just reaching for them out of desperation.

Need to spend more than you have? Rather than go into debt, why not check out one of my most popular posts about 53 Ways to Earn Extra Money on the side?  Many don’t even require you to leave your house!

Why is going into debt for Christmas spending bad?

Let’s look at how debt robs you of your Christmas cheer!

Statistics courtesy of ValuePenguin.  Credit Card interest figures courtesy of Bankrate.com’s calculator.

  1. The average credit card interest rate is currently about 16% (according to CreditCards.com)
  2. Let’s assume that your family only charges $800 for Christmas spending to that credit card
  3. Over 38% of households use credit cards already
  4. The average household carries upwards of $6,000 in credit card debt already (and that figure, on average, is much higher if you live on the east or west coasts in the US)
  5. So if you charge an additional $800 on top of the likely $6,000 you already have, your average minimum monthly payment could be as high as $442.
  6. Paying only minimum payments, it will take about 81 months to pay off the total debt (and that, of course, is ONLY if you quit charging new purchases)
  7. 81 months is almost 7 years!
  8. In that 7 years, you will not only repay the original $6,800 you borrowed but an additional $1,724 in interest!
  9. Putting aside the amount you charged, just investing that $1,724 instead of paying it for the privilege of borrowing money could earn you upwards of $3,359! (factored using an average of 10% growth over 7 years – compound interest calculator courtesy of moneychimp.com). You would almost double your money!

Of course, interest rates vary and are not guaranteed, so your actual results could be different – my point is to get you to realize just how bad an idea it is to use credit cards and what taking the same money and using it in a different way could do for you and your family!

Imagine what you could do with an extra $3,359!

saving money for Christmas Middle Class Dad holiday spending infographic

How do I save money on a tight budget?

The key here is budgeting. A written budget you write out and stick to before the month begins.  You want to know exactly where all of your hard earned dollars are going, even if you don’t have a lot of them.

Once you begin to use a budget you’ll quickly identify if you have a spending problem, an income problem or are simply living beyond your means.

If you still struggle with trying to budgeting money on a low income, check out one of my most popular personal finance posts to give you more actionable tips to get back on track!

Not on a written monthly household budget? 

It’s essential for the financial future of your family and essential for learning how to save money for the holidays.

I have a copy of my Budgeting Spreadsheet available at no charge.

It’s a simple, highly customizable, Excel spreadsheet and you can download it quickly and easily FOR FREE!

saving money for Christmas Middle Class Dad free budget spreadsheet banner

Want an easy and cheap way to cut your bills?

I just signed up with Trim. They negotiate with the bill companies of your choice. If they can lower your payments, they take a small percentage of the savings. If they can’t reduce your bills, it costs you nothing.

The app automatically looks at your monthly bills & spending and then cross-checks that with savings programs almost all vendors have. It’s a great way to put a few extra bucks in those envelopes each month!

When they match up, you save. They’ll even handle the hassle of canceling memberships you no longer want or renegotiate bills for you like insurance and cable bills.

Just sign up and spend on your Visa card and earn automatic savings back on your statement!

Learn more over at Trim.

So What Are the best ways of . . .

How to Save Money for the Holidays (without going into debt)

1. Set a budget in January (that you and your spouse agree on)

  • Agree (with your spouse) in January on an amount to spend for that year’s Christmas
  • Stick to that amount!
  • Setting the budget is the 1st step in saving money for Christmas the right way

2. Be realistic about your budget

  • Be realistic about the amount you spend; a family making $40,000/year does not have to spend $2,000 to make Christmas special
  • If you make under $100,000 gross household income but over $60,000, somewhere around $800 to $1,200 is about right.
  • Make $40,000-$50,000? Somewhere around $600 is about right
  • But if your gross household income is under $40,000 then spend accordingly, but it also doesn’t hurt to put some thought into both long-term career options as well as possibly picking up a part-time seasonal job

3. Don’t forget about additional expenses

  • Are you doing any holiday traveling? That takes gas, minimally. But you may also have hotel and other travel expenses
  • Are you preparing any large, lavish meals for additional family members? Remember to add that extra grocery expense to your budget
  • Are you doing any holiday charity donations? Each year, we sponsor a foster child’s Santa list for about $100. Make sure to budget for that too.

4. Divide your budget amount by 11

  • Divide the total you want to spend by 11 (months) to figure out how much you need to save each month through November
  • Make sure you are doing a written household budget every month before the month begins and that you budget in your Christmas spending money so you aren’t scrambling each month to come up with it!

5. Transfer your monthly Christmas spending amount to a special savings account

  • Automatically transfer that amount of money every month into a separate Christmas spending savings account
  • If you just leave it in your checking account it’s almost guaranteed you will find a way to spend it!

6. Set it and forget it so it’s out of mind

  • The best part about a Christmas club savings account is that you don’t have to think about it!
  • The money goes out of your checking each month into your Christmas club savings account
  • Then it automatically transfers back into your checking at a set time (often Nov 1st)
  • It makes saving money for Christmas easy!
  • But it also removes the need for rigid discipline too

7. Book travel plans at least 8 weeks out

  • If you are traveling for the holidays, you can generally find the best deals on hotels & rental cars when you book at least 8 weeks out.
  • Check out all the best deals available on my page of Ultimate Travel Resources to save you money

8. Check to see if you can housesit at your destination and skip the hotel expense!

  • Housecarers is a worldwide company that matches people looking for a housesitter with people just like you!
  • Travel Rent-free As A House Sitter Anywhere In The World
  • Housecarers Has Been Securely Matching Homeowners With Housesitters Since October 2000

9. Tips if your budget is small

  • Understand that saving money for Christmas doesn’t mean spending like you’re in Congress
  • There was one Christmas where I was almost totally broke. You know what I did? I bought a case of mason jars, got out my pots and pans and made homemade salsa & pasta sauce and canned them up.
  • Add a cool little label I made on my computer and printed on stickers and wa-la! Instant inexpensive Christmas gifts!
  • You know what those gifts had that no store-bought gifts could ever have? My love, care and personality and, literally, my flavor.
  • Family and friends mostly just want you and to connect with you, so don’t stress over budgets; just put down your phone and spend some time connecting and being present to your loved ones. Trust me; that’s the greatest gift you can give them!

10. Crucial tips to not go into debt

  • Agree to not use credit cards or other debt to cover Christmas expenses
  • See my example above about how simply not charging your Christmas spending to credit cards could help put an extra $3k in your pocket!
  • Understand that the money set aside should cover all holiday expenses including travel, food, and gifts for spouses
  • Trust me, even if you were diligently saving money for Christmas spending all year, it’s easy to spend all that on presents, forgetting about other expenses
  • Recognize that many of us splurge on Christmas dinner, travel, nice bottles of wine, etc. That money needs to come out of your Christmas fund too
  • Don’t painstakingly plan all year and then blow it on the finish line – this planning is designed to make your holidays loving and stress-free

11. If you can’t find room in your monthly budget, find expenses to trim

  • If you cut $20/month on groceries, that’s only $5.00/week; ANYONE can afford that
  • Then consider getting rid of expensive cable TV and get the top-rated digital antenna from Amazon for under 30 bucks, or get a Roku stick (click for current Amazon price) and stream Amazon Prime, Netflix, Hulu, and other similar channels. Don’t have Amazon Prime? It’s got tons of channels, movies, and TV shows. 
  • Try Amazon Prime free for 30 days! You’ll also get their famous free 2-day shipping on all qualified purchases.
  • Cut back $10/month on entertainment & clothing expenses and with everything combined you can easily set aside at least $50/month in your Christmas budget

12. Use Black Friday & Cyber Monday to your advantage

  • Department stores and online retailers are counting on your buying extra things when you shop on Black Friday and Cyber Monday
  • Those “unintended purchases” are where they make their money, but it can blow your saving money for Christmas strategy!
  • Make a list of all the presents you intend to purchase and stick to the list!
  • That being said, these dates can be a great way to get great deals on what you were going to buy anyway

13. Buy presents throughout the year to save big!

  • Online and offline department stores don’t always have all the same stuff all year long
  • Guess what they are trying to get rid of in spring? Winter clothes! And they’re getting rid of bathing suits in the fall
  • Time it right and you can do your holiday shopping throughout the year and save a huge amount of money
  • To do it right, you’ll need to use your holiday savings knowing that come Nov 1st you’ll have less $$
  • You’ll also need a good hiding place in your house to store them

Did I cover everything you wanted to know about how to save money for the holidays?

In this post, we took an in-depth look into the world of Christmas and other holiday spending.

We looked at averages and statistics and the most common spending patterns and habits of families. We not only talked about ways to save for Christmas so you don’t go into debt, but we also talked about strategies for saving on the things you buy.

Specifically, though, we looked at how to save money for the holidays so you aren’t stressed over bills or debt and you can actually enjoy the holiday season.

The app Trim automatically looks at your monthly bills & spending and then cross-checks that with savings programs almost all vendors have. It’s a great way to put a few extra bucks in the bank each month for your Christmas savings account!

When they match up, you save. They’ll even handle the hassle of canceling memberships you no longer want or renegotiate bills for you like insurance and cable bills.

Just sign up and spend on your Visa card and earn automatic savings back on your statement!

How does your family do holiday spending?

If you like this post, please follow my Budgeting board on Pinterest for more great tips from myself and top parenting experts!

saving money for Christmas Middle Class Dad Jeff Campbell bio



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Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market. Click to learn more about me

13 thoughts on “How to Save Money for the Holidays (without going into debt)

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    1. Thanks for taking the time to comment Corina!

      I appreciate it very much.

      Thanks for being with me on this journey!

      Cheers, Jeff

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