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.
A look into the world of debt relief seekers
We looked at a sample of data from Freedom Debt Relief of people seeking the best debt relief company for them during July 2025. This data highlights the wide range of individuals turning to debt relief.
Credit utilization and debt relief
How are people using their credit before seeking help? Credit utilization measures how much of a credit line is being used. For example, if you have a credit line of $10,000 and your balance is $3,000, that is a credit utilization of 30%. High credit utilization often signals financial stress. We have looked at people who are seeking debt relief and their credit utilization. (Low credit utilization is 30% or less, medium is between 31% and 50%, high is between 51% and 75%, very high is between 76% to 100%, and over-utilized over 100%). In July 2025, people seeking debt relief had an average of 75% credit utilization.
Here are some interesting numbers:
| Credit utilization bucket | Percent of debt relief seekers |
|---|---|
| Over utilized | 30% |
| Very high | 32% |
| High | 19% |
| Medium | 10% |
| Low | 9% |
The statistics refer to people who had a credit card balance greater than $0.
You don't have to have high credit utilization to look for a debt relief solution. There are a number of solutions for people, whether they have maxed out their credit cards or still have a significant part available.
Personal loan balances – average debt by selected states
Personal loans are one type of installment loans. Generally you borrow at a fixed rate with a fixed monthly payment.
In July 2025, 44% of the debt relief seekers had a personal loan. The average personal loan was $10,718, and the average monthly payment was $362.
Here's a quick look at the top five states by average personal loan balance.
| State | % with personal loan | Avg personal loan balance | Average personal loan original amount | Avg personal loan monthly payment |
|---|---|---|---|---|
| Massachusetts | 42% | $14,653 | $21,431 | $474 |
| Connecticut | 44% | $13,546 | $21,163 | $475 |
| New York | 37% | $13,499 | $20,464 | $447 |
| New Hampshire | 49% | $13,206 | $18,625 | $410 |
| Minnesota | 44% | $12,944 | $18,836 | $470 |
Personal loans are an important financial tool. You can use them for debt consolidation. You can also use them to make large purchases, do home improvements, or for other purposes.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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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.
