How to Budget for the Holidays Without Breaking the Bank

by Pam @ East by Midwest
This page contains affiliate links.

The holiday season is an amazing time of year – full of family, friends, laughter, and joy. But with the good times can come some serious expenses.

No need to panic, though! My tips below will help you budget for the holiday season without breaking the bank.


1. Use past purchases to estimate holiday spending

There can be a lot of financial pitfalls during the holiday season. Creating a holiday budget can help you successfully navigate those pitfalls.

To create a holiday budget, it’s helpful to have a realistic idea of your potential expenses. Your past purchases can help you estimate what you usually spend during the holidays.

You can then use your past purchase information to create a reasonable budget for this holiday season.

This article gives you step by step instructions to obtain your purchase history. I recommend looking at your spending in November and December for last year to help you estimate your budget for this holiday season.

Holiday Budget

2. Categorize Your Purchase History

Once you have your purchase history from last November and December, identify the holiday-specific transactions. Then organize each of the transactions by category.

I use these categories when creating my holiday budget:

  • Gifts (family, friends, co-workers, neighbors, etc.)
  • Food (for when you go out to restaurants, host an event, or bring something to a potluck)
  • Clothing (for all those holiday gatherings)
  • Travel (going over the river and through the woods to Grandma’s is expensive!)

If you have holiday expenses that don’t fit these categories, you can create a new category and include those expenses in the new category.

Holiday Budget

3. Update Your Purchase History for This Year

After you’ve organized your holiday transactions by category, take a look at the transactions in each category and decide if there are any transactions that you won’t have this year.

Maybe last year you flew to Arizona for the holidays, but this year you’re staying at home. Cross any transactions like this off your list.

Next, identify any new purchases you’ll have this year. Maybe you started a new job and you’ll need some nice evening attire for the annual holiday party.

Add any transactions like this to your list. To estimate the cost, see if you can find a similar transaction from last year that gives you a comparable range.

Holiday Budget

4. Set Your Preliminary Budget Amount

After you’ve updated your purchase history for this year, sum up the costs in each category.

The total will give you a sense of how much you’ve historically spent on the holidays (with the addition of any new expenses for this year).

If you’re shocked by a large number – you’re not alone. Many people (including me in the past!) are completely unaware of how much they’re actually spending during the holidays.

The sum of costs in each budget category is your preliminary budget to help you determine your final budget for the holidays this year.

Holiday Budget

5. Set Your Final Budget Amount

If the preliminary budget number you calculated in #4 is too high, follow the next steps. If you think the number is fairly reasonable, skip to #6 below.

To adjust your preliminary budget, take a look at the transactions in each of your budget categories to see if there’s anything you could change to cut down on costs this year. Here are some examples:


Many of us want to be known as the person who is incredibly generous with gifts. But that can have serious consequences on the health of your finances.

Instead of buying gifts for everyone in your extended family this year, how about suggesting that people draw names out of a hat so that everyone will buy a gift for just one person this year?

It means that people can focus on getting a thoughtful gift for one person, rather than having the stress of running around to get gifts for everyone.

If you have young kids in the extended family, you could do a hybrid where you get gifts for the young kids, but everyone else’s name goes in a hat.

You can take the same approach with your friends and coworkers.

After one Christmas where my two brothers and I all managed to get each other the same gift (wireless speakers), we decided we weren’t going to do “big” gifts anymore.

We would just give small items that we picked up during the year that reminded us of each other. It saved costs, took the pressure off getting that “perfect” gift, and allowed us to have fun when giving gifts.

Last year, I gave my brothers cheap, ugly Christmas sweaters of their college football team. It didn’t cost me much money and I got a kick out of getting them those ridiculous sweaters.


Let’s start with the food you buy to bring to a potluck. Have you historically gone all out and been the one to bring the shrimp cocktail, lobster dip, and crab cake appetizer?

When you go all out, the costs can add up really quickly.

Instead of going all out this year, would your family and friends be okay with you bringing fewer items? Or maybe instead of bringing really expensive dishes, you bring some less expensive dishes?

For example, instead of bringing expensive seafood dishes, you could bring along some pasta dishes. The pasta dishes will still be appreciated, but won’t be as expensive as the seafood dishes.

Next, let’s consider the food you buy when you go to restaurants. 

Maybe your friends wanted to do Friendsgiving last year at a posh restaurant downtown. Or maybe you decided to treat your entire work team to lunch at a steakhouse.

This year, could you instead suggest that both events be potlucks? People tend to enjoy the memories and camaraderie of being together – they don’t necessarily need an expensive restaurant to make the most of the holiday season.


In the past, it’s been easy for me to get carried away with clothing during the holidays. I wanted to wear a new outfit for each event, with each outfit getting progressively fancier and more expensive.

But I had to stop myself from doing that. It was costing me way too much money and translated into clothes being worn once before heading off to Goodwill.

To the extent that I do buy new clothes during the holidays, I now focus on buying clothes that can be worn for a variety of occasions.

A black blazer that looks great over a cocktail dress that also looks great with business professional attire at work. A pair of boots that looks equally great with a skirt, jeans, or slacks.

Before you buy clothes for a holiday event, think of other times when you can wear it. If you can’t think of several other occasions, it’s probably something to put back on the shelf and to keep looking.


My mom lives in Iowa, my brother James lives in Denver, my brother John lives in Dallas, and I live in Washington, DC. Because my mom and brothers aren’t local, that can mean hefty travel costs during the holiday.

This is the part where budgeted can be really tough. While I want to see everyone in my family as frequently as possible, and especially during the holidays, I just can’t do that and maintain healthy finances.

If you’re in the same situation as me, you can brainstorm on different ways to keep costs down. For example, if your family is spread out like my family, can you all rotate where you spend the holidays?

Maybe at your house this year, your sister’s house next year, your mom’s house the year after that, etc. Then the same people don’t have to bear the travel costs each year.

Another option is to travel on less expensive days. If you fly on the holiday itself (Christmas or Thanksgiving), you can save quite a bit in travel costs.

You can also opt to celebrate the holiday early or late. For example, you could travel home for a few days mid-December.

You’ll get to see your family and celebrate the holiday, but without the crushing holiday travel costs.

Holiday Budget

6. Track Your Budget

Once you’ve committed to a budget in each category, your next step is to start tracking it. It’s hard to stick to a budget if you don’t know how much you’re spending.

You can rely on online spending reports for your credit or debit card or you can use a financial app like Mint.

You’ll find easy step-by-step instructions for tracking your budget in this article.

Holiday Budget

Bonus: Easy Ways to Make Extra Cash for the Holidays

Because the holidays can be expensive, sometimes it’s nice to have some extra cash flow during the holidays. Here are some easy ways to make extra cash for the holidays:

  • Take surveys. I find taking surveys to be a great way to earn a little extra cash during the holidays. Here are some of my favorites:
  • Temporary or part-time jobs. Simply enter any of the keywords below into Google, and available jobs in your area will pop up:
    • Seasonal jobs
    • Babysitting
    • Petsitting
    • Housesitting
    • Dog walking
    • Test proctor
    • Mystery shopper
  • Start a money-making blog. Starting a blog can be a great way to earn extra money on the side. Read this article for step-by step instructions to start your own blog.
  • Sell items around the house. If you’re like me, you likely have some items around the house that you don’t use and could be sold for some extra cash. ThredUp and Poshmark are websites that make it easy to sell your items.
  • Sell something on Etsy. I often use Esty to buy downloadable templates for invitations and art around the house. You can make a downlodable template once and sell it multiple times on Etsy as an easy way to earn funds this holiday season.
Holiday Budget

Related Posts

Leave a Comment