The Formula for Creating a Holiday Spending Budget

With continued rising prices on items, and high interest rates on credit cards, it is more important than ever to set a budget and guidelines for Christmas shopping, look for deals, and avoid adding to your credit card debt.


Ask these questions:
What have you already saved or set aside for this holiday shopping season?
What is your current credit card debt?

Next Steps:
1) Set a realistic spending cap before you start shopping.
Financial experts recommend that you spend no more than 1% to 1.5% of your annual salary.
If you make $50,000 per year, your goal should be to spend no more than $500 -$750.

2) Make a list of who you will be purchasing gifts for and set a limit for each person on the list to stay within your budget. Don’t feel obligated for everyone!

3) Track what you are spending and stay accountable to avoid overspending.


Research prices and deals.
You can compare prices online at various, reputable retailers, and look at ads, print or online, and determine what the best price is for the items you are looking for.

Look for rewards or online discounts.
Check your credit card rewards and see if they offer discounts at various retailers.  Look at the apps for the stores you plan to shop in to see if they offer discounts as well. Make sure you apply that discount code when you checkout for online shopping.


Shop online from trusted websites.
Once you start browsing online, it seems you will start getting popups or ads for those or similar items when you are on social media or other websites. Make sure you are purchasing items through a reputable company. Many of the sites that pop up are later impossible to find. Don’t be a victim of fraud just because you think you have found a great deal.

Check return policies before you buy.
Many sellers offer a short window of time to return gifts. Many online stores now reduce the price of the item returned by a restocking or handling fee, in addition to the shipping costs.


Shop locally and support small businesses. 
You may be able to find some unique and meaningful gifts by shopping locally and supporting your community’s small businesses. Buying in person allows you to see the quality and size of the item and avoid shipping costs.

Consider gifts of time, baked goods, or something made by hand.


In January, start saving a set amount per month for next Christmas to build your budget and reduce need to tap into credit resources.

The information contained in this article is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional for your specific situation.

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Profile photo of Penny Wasem, CPA, CFP, PFS, owner of Lifetime Financial Planning Solutions in Lancaster, Ohio.

By Penny Wasem, CPA, CFP, PFS

Penny L. Wasem is the owner of Lifetime Financial Planning Solutions, LLC. A summa cum laude graduate of Ohio University, Penny earned a Bachelor of Business Administration with focus in accounting and mathematics. She serves on the board of The Fairfield Medical Center Foundation, is a member of the Investment Committee of The Fairfield County Foundation and has been active on many non-profit boards in the community. Penny lives in Lancaster with her husband Eric Hubbard and is parent to Clark and Olivia Hubbard.