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How to Plan For and Stick to Your Holiday Shopping Budget


“What is the right amount for us to spend for Christmas?” Lori asked me.  Her question came in the midst of a Money Makeover I was conducting for a Fortune 500 company where I consult on their employee benefits (i.e. getting employees to make better use of their 401(k)s and other things). Lori and her husband had been chosen to receive this makeover because they were typical – they felt like they were treading water trying to save money. Instead it was just running through their fingers. And the holidays were exemplative of the problem.

“What did you spend last year?” I asked her. She ran through a mental accounting, listing the expenses both to me (and it seemed, in her head).  “Of course we buy gifts for our four children, but we’ve got a huge family. We go to lots of parties and family gatherings. We have to get gifts for our own kids – one per party, from Santa – as well as something small for each of my Aunts. Then there are the direct family members, the siblings, the friends.”

It was exhausting just hearing about it. All in, she expected she was spent about $2,000 – about 3% of the family’s take-home income – last holiday season.  “Do you think we could cut that in half?” she asked.  “Yes,” I answered, noting that I thought cutting it in half was actually appropriate. (Budgeting guidelines often point to 1.5% of annual take home income for the holidays as the right sum.) But you’re going to have to make a plan.

The holidays all too often slide into the category of exceptional expenses. These are typically things we buy at random–like concert tickets or celebratory dinners. Not only do we not budget for them in advance, we’re willing to spend more on them because we view them as out of the ordinary. Sounds familiar, right? But the holidays are not that.

They happen every year. We’ve got such a handle on our traditions that who we buy for isn’t really random at all. And, while no, we’re not suggesting you boycott holiday gifting (although a surprisingly large number of people are up for doing that), budgeting for them, even when you factor in the excitement of it, is absolutely possible.

  • Figure out your number. How much do you have to spend this season? That’s an important place to start. The 1.5% of take-home can be a good place to start, but you can also look not to exceed last year’s spending or, if you know you are going to float the holidays on your credit card, spend only the amount you know you’ll be able to repay by February.
  • Divide it up. Once you know how much you can spend, it’s time to play Santa. Make a list of the people you’re buying for (and the charities you’re giving to). Allocate a sum to each one. Don’t forget the other holiday costs that have to factor into this tally: Extra Ubers home from holiday parties where you had an extra drink. Cards. Wrapping paper. Postage. Every line item gets an approximate amount you want to or believe you’ll need to spend.
  • Ready, set, shop.  As you go out (or head to your computer) and start shopping for individuals on your list, try to stick within the numerical range you set for each one. If you go over, subtract some of the money you set aside to shop for others so that you meet your ultimate goal. The same is true of the other holiday costs. If you borrow from Peter, you have to pay Paul.

Flash forward two months into our makeover and Lori – who is working within the framework I set out above — is fully enmeshed in her holiday preparations. When I asked her how it was going, she noted that she turned down invitations to two different holiday celebrations (which still left plenty of celebrating, but wiped a good dozen gifts off her shopping list) not to mention the gas and time it took to get there. She was also focused on finding one really meaningful gift for each child rather than trying to fill up the area under the tree. And she’s on track to cut last year’s holiday spending – as she had hoped – in half.  “How do you feel?” I asked her.  She responded: “Relieved.”

This essay was featured in the December 1st edition of The Sunday Paper. The Sunday Paper inspires hearts and minds to rise above the noise. To get The Sunday Paper delivered to your inbox each Sunday morning for free, click here to subscribe.


Jean Chatzky launched HerMoney Media and in 2018 to provide women with information about money they can actually trust. The award-winning financial editor of NBC Today, Jean has also appeared on shows including Oprah, MSNBC, CNN, The View, The Talk and many others. Millions have tuned into her podcast, HerMoney with Jean Chatzky which has received shoutouts from The New York Times, Yahoo Finance and Refinery29. The best-selling author of 11 books and an in-demand motivational speaker, Jean is also AARP’s Financial Ambassador and a fierce advocate for financial literacy. In 2015, she partnered with the PwC Charitable Foundation and Time for Kids to launch Your $, an in-school magazine that reaches two million school children each month. Her most recent book, Women with Money: The Judgement-Free Guide to Creating the Joyful, Less Stressed, Purposeful (and Yes, Rich) Life You Deserve, is available now. To sign up for HerMoney, click here.

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