Spread Holiday Cheer Without Overspending. Here Are 7 Ways to Do Christmas on a Budget

Two Japanese women look at Christmas ornaments.
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Buying holiday gifts for all your loved ones can add a bunch of financial stress to what’s supposed to be a joyous time of year.

The commercialism of the season encourages you to buy-buy-buy, which means it’s easy to find yourself overspending or even going into debt. Your gifts might put a smile on someone’s face — but at what cost?

It’s okay to rethink some of your holiday shopping plans if you’re trying to survive Christmas on a budget. Here are seven tactics you can use to spend less.

7 Gift-Giving Strategies to Celebrate Christmas on a Budget

Get your holiday spending under control by implementing a few of these tips.

1. Shop With Cash

Embrace a cash envelope budget for holiday spending. Figure out how much you feel comfortable spending on gifts this year, and withdraw that amount from your bank account. Then pay for gifts only with that cash.

Once the money’s gone, that’s it for your Christmas shopping. Don’t use your debit or credit cards to purchase anything else. This method is great because you’ll be forced to be strategic about what you buy and you won’t go over budget.

If you’re doing most of your holiday shopping online or are trying to avoid using cash, there are ways to transition the cash envelope system to a cashless version. For example, you could use a prepaid debit card or a store gift card to purchase gifts or download a budgeting app like Mvelopes that is based on the cash envelope method.

2. Limit Your Christmas List

Be selective about who you buy presents for, and focus only on your closest family and friends. How many people you shop for will depend on your budget and how much you think you’ll spend on each gift.

If your holiday budget is $200, for instance, and you think you can keep each individual gift under $25, then you can include eight people on your list.

Let friends and family know that you’re doing Christmas on a budget this year and you may not be able to participate in the same gift exchanges as years past.

3. Get in on Group Giving

Group giving can be done a few different ways. You could select one gift to give a group of people — like a family board game for your nieces and nephews — rather than buying everyone individual gifts. Or you could organize a Secret Santa or similar gift exchange with a group — just make sure to set a nominal spending threshold.

Another example of group giving is to get a group to chip in on a bigger purchase. For example, if you want to buy a gift for your child’s teacher, get a bunch of parents to contribute a few bucks to get something nice.

4. Try the Four Gift Rule

If you tend to overspend on your kids, take a more lean approach to giving this year and try the four gift rule.

Instead of checking everything off your children’s wish lists, buy only four things — something they want, something they need, something to wear and something to read. Set a spending limit for each category.

Your kids will still get a variety of presents (and probably extra things from the grandparents, too) and you won’t be swimming in credit card bills after the holidays.

5. Shop Second-Hand

A gift doesn’t have to be brand new to be new to the recipient. Think: Vintage clothing for your fashion-forward friend or gently-loved toys for your toddler who won’t even know they’re preowned.

The awesome thing about second-hand treasures is you don’t even have to buy anything. Regift unused items you have at home or check to see if there’s anything interesting up for grabs from your local Buy Nothing Group.

Pro Tip

These dos and don’ts to holiday shopping at a thrift store will help you select the perfect used gift.

6. Make Your Own Gifts

There’s a DIY Christmas gift (or DIY stocking stuffer) for every skill level. Add hot cocoa mix to Mason jars for an easy way to do Christmas on a budget. Knit a scarf if you’re an experienced crafter.

Though you’ll still spend money on supplies, you’ll likely pay less than store-bought equivalents. And homemade presents show the thought you put into the gift — and it’s the thought that counts.

7. Rethink the “Experience” Gift

Opting for experiences rather than material items has grown in popularity over the past several years, but gifts like concert tickets or theme park passes can get rather pricey. And if the recipient isn’t able to use the tickets for whatever reason, the gift becomes a dud.

Instead, reflect on your skill set to see what you could offer up to family and friends that can’t be wrapped and tied with a bow. Redo your best friend’s resume or host a one-on-one cooking class for your brother. If you can’t meet in person, try one of these free video platforms.

Feeling overwhelmed? Create a budget that works for you with our budgeting bootcamp!

Nicole Dow is a senior writer at The Penny Hoarder.