How to budget for Christmas gifts. (Hint: Christmas is the same day every year.)

As I write this, there are less than three weeks until Christmas.  Three weeks! And I haven't bought a single gift. Yikes!  

From my experience, I think there are three types of Christmas gift buyers.  Which one of thes are you?

  1. The thoughtful gift-giver who buys gifts in July when everyone else is focused on summer vacations and the 4th of July and not winter and ugly-sweater parties.  This person may even have a Pinterest board to keep track of ideas.
  2. The steady-as-you-go purchaser who might start in the fall when pumpkin spice lattes emerge on coffee-shop menus and you find items here and there for the loved ones in your life.  This purchaser might also brave the Black Thursfriday crowds, participate in Small Business Saturday, Cyber Monday, Giving Tuesday... did I miss anything? (Nothing inherently wrong with some of these - except Black Thursfriday in my book.)
  3. The last-minute buyer who wakes up three weeks from Christmas, says "I can't believe Christmas is in three weeks!", and engages in a flurry of online shopping and mall visits.  This also includes those Christmas Eve shoppers who are the last ones standing in the mall as stores close up shop and retail associates give you the death glare to DECIDE already!  Buying the perfect gift off Etsy or Scoutmob is usually not an option at this point if shipping isn't quick.

I aspire to be the thoughtful gift-giver, but can't seem to get ahead of all the fall celebrations in our family.  So I'm a last-minute buyer.  But no matter what kind of Christmas gift buyer you are, one fact remains.  Christmas is the same day every year and there is no excuse for blowing your budget!  

christmas gift

So how do you budget for Christmas gifts and avoid overspending?  (Or maybe even underspending.)

  1. Set a budget.  It seems so obvious, right? But when I was younger, I just spent money based on gifts I wanted people to have and not based on whether it was within a reasonable budget given other financial priorities.  The average shopper plans to spend $861 this Christmas on gifts.  I'm not here to determine whether that is too much or too little as that depends on your personal situation, but I will say that we spend a lot less than that for everyone in our family.  But let's use $861 as our example.  
  2. Set aside money throughout the year. As I said earlier, Christmas is the same day every year. Take the $861 (or whatever your budget is) and divide it by 12 to get how much you should set aside every month to build your Christmas fund. In our average example, that would be $71.75 monthly.  TIP: Do you like to throw parties or enjoy adding to your Christmas decor each year?  Set a budget for that and add it to your monthly Christmas savings.
  3. Determine who you are going to purchase gifts for in advance and how much you can spend for each person.  My dad enjoys grilling, but if I bought a Big Green Egg Mini grill for him, I would totally blow hald of my entire example budget of $861. If I only have a few other people I want to give gifts to, maybe that could make sense.  But I actually have a large family so it really doesn't.  TIP: Unexpected gift giving opportunities might pop up. You may want to reserve some of your budget to purchase host gifts for holiday parties. 
  4. Keep track! I keep a spreadsheet (I know, I know - I'm such a personal finance nerd!) with who I'm going to purchase a gift for and how much of my budget I can spend on them.  Once I buy a gift, I update the spreadsheet (you can download it here) to track my spending and see if I am on track to stay within budget. If you don't know a worksheet from a cell, just write it down somewhere. 
  5. Don't let shopping for others turn into shopping for yourself.  Stick to your budget, and if you like shopping for yourself, it has to be in the budget.  Period.

I spent an hour trying to leave a mall parking garage this weekend.  No joke.  And I didn't even leave with a gift.  Perhaps next July I'll make a homemade pumpkin spice latte and start updating my Christmas budget spreadsheet.