How to Set up a Christmas Budget
- Sticking to a Christmas budget could help you avoid holiday debt.
- Look closely at your savings and upcoming paychecks to see how much money you might have to work with.
- Make a detailed list of your holiday expenses so you can prioritize.
Table of Contents
- 1. See How Much Money You Have Saved Already
- 2. Figure Out How Much You Can Save from Upcoming Paychecks
- 3. Decide if You're Willing to Boost Your Income with a Side Job
- 4. Make a Detailed List of Your Christmas Spending Categories
- 5. Prioritize Your Spending Categories
- A January With no New Debt Could Put the Happy in Your Holiday
Love making Christmas special? So do we. Christmas only comes once a year, so it's natural to want to go all out.
It’s not too early to set up your holiday budget. Most of us are going to spend a chunk of change. Last year, consumers planned to spend an average of $902 on Christmas, according to the National Retail Federation.
Nobody wants to end up needing debt relief once the holiday is over. You don't have to. If you set a Christmas budget ahead of time, you can avoid debt and enjoy the holiday season—and the months afterward—with less stress.
Here are five steps to set up your Christmas budget so you’re able to make the most of the holiday you love.
1. See How Much Money You Have Saved Already
Setting up a Christmas budget is similar to setting up a regular household budget. You need to list your various expenses and compare them to your income.
Your Christmas budget should start with the amount of money you already have saved for the holidays. If you’ve been socking money away for Christmas spending and have $400 saved so far, that’s your starting point.
Just make sure you’re not using your emergency fund for Christmas purchases. It’s important to keep your emergency fund reserved for unplanned expenses like car repairs or medical bills.
2. Figure Out How Much You Can Save from Upcoming Paychecks
If you’re starting your holiday budget during the summer (and it’s really never too early to do it), you have a bunch of upcoming paychecks to look forward to between now and the holiday. Count how many more paychecks you’ll collect between now and Christmas, and try to figure out how much you can reasonably expect to save from each one.
It may be that you bring home $3,500 a month and need $3,200 to cover essential bills. It’s unlikely that you won’t want to spend any money on entertainment or fun purchases month after month. But if you’re putting your Christmas budget together four months ahead of the holiday and you think you can reasonably save $100 per month, that’s another $400 for you to work with.
3. Decide if You're Willing to Boost Your Income with a Side Job
If you’re saving for Christmas or any other financial goal, there’s no need to limit yourself to your regular paycheck. The booming gig economy offers plenty of opportunities for people to earn money with a side job.
More than 41% of Americans today have a side hustle, reports PYMNTS Intelligence. If you’re willing to work one, the sooner you can line up a gig, the sooner you’ll get a sense of how much income you can make from it. That’s money you can factor into your Christmas budget.
Just make sure to account for taxes on your side income if you’re being paid on a freelance basis.
4. Make a Detailed List of Your Christmas Spending Categories
You may be planning to spend money on many different expenses during the holidays. And your Christmas budget should account for all of them.
Some of the items to go into your Christmas budget could include:
Travel
Gifts
Decorations both inside and outside of the home
Holiday cards
Supplies needed to host meals or parties
Items to bring to holiday parties (if you don’t like to show up empty-handed)
Once you’ve come up with this list, try to assign a cost to each item. For example, within the gift category, list the people you want to buy presents for to get an idea of what you’re looking at spending.
5. Prioritize Your Spending Categories
If you’ve gotten to this point in your Christmas budget, you should hopefully have a sense of how much money you’ll have available to spend on the holiday and what your different expenses look like. From here, it’s time to set priorities.
Maybe it's more important for you to be able to visit family or buy gifts than it is to put lights up outside your home or send a custom holiday card. Figure out what will make your Christmas most meaningful so you can set money aside in your budget for those things and know which to cut back on.
Let’s say you figure out that you can come up with a total of $1,200 to spend on the holidays. From there, you might price out a ticket to visit your family for $500. If that’s the most important thing on your list, you should allocate the money to it without question.
Now you have $700 left. If you think gifts will cost you $500, you’re down to $200 once those are purchased.
If you care less about decorations but want to make sure you’re reaching out to friends and family with cheerful holiday cards, buy those first. If their cost is $120, that leaves you with $80.
That may not be enough to go all out on decorations. But it may be enough for a small Christmas tree and some lights to hang over your fireplace.
A January With no New Debt Could Put the Happy in Your Holiday
The last thing you want this Christmas is holiday debt. And with a good budget, you can avoid it. Follow these tips so you’re able to enjoy Christmas to the fullest without having the burden of debt dragging you down in January.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during September 2025. The data uncovers various trends and statistics about people seeking debt help.
Credit card balances by age group for those seeking debt relief
How do credit card balances vary across different age groups? In September 2025, people seeking debt relief showed the following trends in their open credit card tradelines and average credit card balances:
Ages 18-25: Average balance of $9,117 with a monthly payment of $279
Ages 26-35: Average balance of $12,438 with a monthly payment of $373
Ages 36-50: Average balance of $15,436 with a monthly payment of $431
Ages 51-65: Average balance of $16,159 with a monthly payment of $533
Ages 65+: Average balance of $16,546 with a monthly payment of $498
These figures show that credit card debt can affect anyone, regardless of age. Managing credit card debt can be challenging, whether you're just starting out or nearing retirement.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In September 2025, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Manage Your Finances Better
Understanding your debt situation is crucial. It could be high credit use, many tradelines, or a low FICO score. The right debt relief can help you manage your money. Begin your journey to financial stability by taking the first step.
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Author Information
Written by
Maurie Backman
Maurie Backman is a personal finance writer with over 10 years of experience. Her coverage areas include retirement, investing, real estate, and credit and debt management.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
How much should I spend on Christmas?
Your Christmas budget depends on your available money and what's important to your family. You can set aside a small percentage of your income for Christmas spending. You could consider allocating around 1% of your annual before-tax income. It’s more important to select an amount you can comfortably spare without getting into debt. Then, make a spending plan for your holiday expenses and start saving for Christmas.
Are holiday loans a good idea?
Usually, no, borrowing for the holidays is not a good idea. One reason is that most loan terms are longer than one year. So you’ll already be looking to spend money on the holidays again before last year’s holiday loan is paid off.
How do you get out of holiday debt?
There are different ways to get out of holiday debt, including:
Use a repayment plan like debt snowball (from lowest to highest balance) or debt avalanche (from highest to lowest interest cost).
Consolidate debt with a loan or use a credit card that offers balance transfers at 0% APR.
Cut costs and put the money toward your debt.
Get a second income until you pay off debt.
