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debt free Christmas

How to Save for a Debt-Free Christmas

Are you ready to save money for a debt-free Christmas next year? Then I’m so glad that you are reading this article now so that you can plan ahead and save throughout the next year for a fret-free, debt-free Christmas!

Note: Reading this article a little late? Not the beginning of the year anymore? No worries! Just save what you can starting now (even adjust the numbers to save enough to completely fund Christmas with the time you have left, if you can, or simply plan to spend a little less on Christmas this year if needed), and you’ll be able to have all year to save for your debt-free, fret-free Christmas next year!

Because like clockwork, Christmas is going to be here again next December. And before you know it, the holiday bustle will be upon us once again. But next year, you will have one less thing to stress about because your Christmas will already be paid for. No more still paying on your credit-card Christmas next November!


Tip: Save the image above to be able to refer later to this article on how to save for a debt-free Christmas for 2020!


Why Have a Debt-Free Christmas This Year?

If you have never saved money for a debt-free Christmas before, you may wonder what the big deal is. Well, for one thing, the less debt you have, the more control you have over what one financial expert calls your greatest wealth-building tool—your income. For another, if you know that you have already planned to save for Christmas, you won’t have the stress and that guilty tug in the back of your mind that comes from knowing that you are spending money that you don’t have.

And finally, by planning for a debt-free Christmas you will have a set amount that you will know is available to spend and so you can tell yourself no when you see just one more thing that catches your eye. Knowing exactly how much you have to spend, rather than just winging it, will keep you from overspending and using money that perhaps should have been used for other things or toward financial goals.



Plan Your Debt-Free Christmas!

So now that we have talked a little about the why behind a debt-free Christmas, let’s talk about the how. Fortunately, saving for a debt-free Christmas really is simple. And even more, it’s pretty easy, too! (Because not all things that are simple are easy—leaving a moist piece of delicious chocolate cake on the table is simple, but it sure isn’t always easy!) Here are five simple steps to follow to accomplish your debt-free Christmas.


1. Set a Christmas budget in order to accomplish a debt-free Christmas.

First, as you plan for your debt-free Christmas, decide how much you want to save. Of course $1,000 is a nice round number, but you don’t have to spend that much. I don’t think we have ever spent more than $300 on Christmas.

If you know how much you spent (or are likely to spend) for Christmas this year, then you can use that as a guideline for how much to spend next year.

Don’t have a monthly budget set up yet? Learn the simple steps for how to make a budget and how to stick to it!


2. Decide how much to save each month.

So once you know how much you would like to spend for your debt-free Christmas, you can figure out how much to save each month. So if you want to save $1,000 for Christmas next year, then you would need to save about $80 per month.

Or let’s say that you are working hard to reach other financial goals, and so you are happy to have a little bit less expensive Christmas. If you want to save $500 for Christmas, then you would need to save $40 per month. And $40 per month is pretty doable in most people’s budgets, if it’s something they set as a priority.

Note: Do you have a tight budget? Check out these ideas to increase your income!

Of course, if you want to spend somewhere in between that, then you could save $60 each month and have a little over $700 to spend on your debt-free Christmas next year. That’s about the average amount that families in America spent on Christmas last year.


3. Open a Christmas savings account to save for your debt-free Christmas.

To have a specific place to save for your debt-free Christmas, open a savings account specifically for that purpose. If your bank or credit union doesn’t allow you to set up multiple savings accounts or doesn’t offer very good interest rates on savings accounts, look into an online bank like Capital One 360. We’ve been banking with them for 14 years (from the time when they were still ING Direct), and they’ve been a great bank for us (despite my reservations when Capital One bought them). One of the things that I love about my Cap One 360 account is that you can have multiple savings accounts for your various savings goals (we have more than 10 savings accounts!). And one of those is our Christmas and gift giving savings fund. They also have one of the best interest rates around.


4. Find areas where you can save to fund your debt-free Christmas.

Even though $40 to $80 a month isn’t a huge amount, given the fact that most Americans live paycheck to paycheck, it might still be difficult to find it in your family budget. (Haven’t started budgeting yet? Let’s change that this year! Download your free spending tracker and simple starter budget!)

So here are ideas for places where you can trim your budget to fund your Christmas savings account as well as other savings accounts while you’re at it! Top areas where you can likely reduce your spending include (click the links below to read more about each area):

Want even more ideas for how to spend less? Check out 20+ ideas for how to reduce your spending in various areas.


5. Set up automatic transfers to fund your Christmas savings account.

One way to ensure that you save like you want to in order to accomplish your debt-free Christmas next year is to automate your finances. That way you can essentially set it and forget it—you can determine how much you want to save each month based on your overall budget, set up automatic transfers from your checking account to your savings account, and then not think about it again until the Christmas shopping season next year!

If you haven’t automated your finances yet, you’re missing out! So let’s change that. Set up automatic transfers to take money from your checking account to your Christmas savings account. You could set up the transfers to correspond to your paychecks, or just set up a monthly transfer on a certain day of the month.

And while you’re at it, if you haven’t set up automatic savings plans for other budget categories, you should. By automating your finances you can set yourself up for financial success by saving for emergencies, saving up for large expenses, investing for retirement, and more.

Learn more about how to automate your finances to set yourself up for financial success.


Final Thoughts on How to Have a Debt Free Christmas

And that’s it! You’re all set up now to enjoy your debt-free Christmas next year. Now all that’s left to do is to relax until you’re ready to begin your Christmas shopping next year. Go you!

Also check out this article with must-do tips to save money on your Christmas shopping.


How much do you normally spend on Christmas? Do you feel that that is a reasonable amount, or do you want to decrease or increase that amount? Leave a comment below to share your thoughts. I’d love to hear your opinion!


Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help a family member or friend or people in general? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being with others. Thank you!

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