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Guest article by John of Frugal Rules dot com

Save Money-Shop Worry Free all Year



Barb wrote a wonderful post last week on 7 Holiday Shopping Tips and she kindly asked me to share how my family and I manage our holiday shopping expenses. Holiday shopping can be an expensive endeavor; a recent statistic shows that families spend $743 per year on Christmas gifts (as of 2010). I know some personal finance bloggers might crinkle their noses at this but, my wife and I spend about $950 per year on holiday shopping and do it completely worry free, largely because we know where the money is coming from.

Plan Your Holiday Shopping in January

Anyone who knows me well knows that I love to budget. I firmly believe that if you’re going to make financial headway you need to know where your money is going. Not only does this include everyday things like housing, groceries, and utilities, but it also includes spending for other events throughout the year. Every year my wife and I analyze our budget to see what changes need to be made during the year. We’ve been budgeting long enough now that we usually only need to make minor tweaks. Since holiday shopping is a major expense, we include that as a line item on our budget.

Sock Away Money Throughout the Year

Not only do we budget, but we use the envelope budget system. Remember how I said we budget $950 per year for holiday shopping? Well, each month we withdraw $80 from our checking account and put it in our envelope marked “Christmas” and the money sits there waiting to be spent. Now, many people are not fans of the cash system; that’s okay because you can still use this method without the envelope system. You can set up a separate savings account for the funds or you can simply keep them in your usual savings account to be used for holiday shopping. When it comes time for us to go holiday shopping, we can do it worry free because we know where the money is coming from. Additionally, we make our money work further as we use our credit card to earn reward points and then pay off the bill the following month with the cash we have saved. I know it might seem like a lot of work, but it really isn’t and it allows us to shop  worry free.

My wife and I started using this system shortly after we were married, 11 years ago, as we found that our large family enjoyed exchanging gifts over the holidays. With that in mind, we knew that we needed a system to help us stay fiscally disciplined while at the same time allowed us to enjoy the season. Now that we have three children, it’s even more important to us as shopping during the holidays can begin to add up. As parents, we’ve learned that grandparents love buying Christmas gifts for our kids. After the first holiday season, we held back a large amount of what we originally budgeted for our kids and now use it for other fun child related things throughout the year.

Can I Apply My Holiday Shopping Strategy to Other Areas?

You bet you can! The view we take with our budgeting is useful for both short and long term spending. The same budgeting strategy we practice for Christmas can also be used for other irregular expenses.

My wife and I have been blessed to take two amazing cruises to the Southern Caribbean – one in celebration of our fifth wedding anniversary and one to celebrate our tenth. We saved a little bit each month and set aside money from our tax returns for years to save up enough to enjoy two very nice cruises. Another way we apply this strategy is toward transportation. We know that a newer car is important since we have a growing family, so we automate our vehicle savings each month. We know that retirement investing is important as well, so we automate as much of that as we can.

The takeaway is that whether it’s holiday shopping or saving for that next vacation, it will not happen overnight. Future spending goals take time to reach and time to save for. I know that if I had to plunk down nearly $1000 for holiday shopping, it could be done, but it would be painful and foolish.With discipline and year round saving we accomplish all of our financial goals, whether it was having cash for holiday shopping or saving for a car purchase.

John is the founder of Frugal Rules, a finance blog that discusses investing, budgeting, and frugal living. John is a father, husband, and veteran of the financial services industry who’s passionate about helping people find freedom through frugality. Visit him at or follow him on Twitter.

 How do you budget for your holiday shopping? Do you save money throughout the year or do you wing it?

image credit; vintage living magazine-google images






  1. Great tips! Plan your expenditures and put it in your budget. It sure makes it easier. It should help create some discipline and establish a goal.


    December 3, 2012

  2. My mum has a little presents closet at home where she keeps small gifts for any occasion. She would fill it when something is on sale or she goes on holidays and brings back soaps and candles, then have gits on hand for the holidays. I don’t really budget, in my house, parents pay for everything, we just sit down and eat 🙂


    December 4, 2012

  3. I typically wing it, but we tend not to buy much for each other. Usually our gifts consist of a gift basket lol.

    Veronica @ Pelican on Money

    December 4, 2012

  4. @KC- Thanks. It does make it easier and really comes out of a discipline of saving and budgeting for many things.
    @Pauline- My Mom is much the same way, it must be a Mom thing. 🙂
    @Veronica- I can see how you would not need to budget for gifts if you’re not buying much. I like the gift basket idea, especially if it has food…not that I need any more of that at this time of year. 🙂

    John S @ Frugal Rules

    December 4, 2012

  5. I generally have in mind about how much I want to spend during the holidays, and have the funds to spend the money. I don’t budget to the dollar, or ten dollars, or anything like that. Just have a general amount in mind ahead of time and stick to that range.

    Winging it doesn’t seem like a good move, more like having emotion trump responsibility!


    December 4, 2012

  6. It’s amazing how many people wait until December to find money for presents. It’s not like the day changes! Buying presents throughout the year can help save money too. My wife bought an $80 talking doll for my niece for $20 right after Christmas. We looked like big shots without taking a big hit to our bank account.


    December 4, 2012

  7. @Squirrelers -You have to go with what works for you, especially if you have the funds to purchase the gifts.
    @Justin-I feel the same way, it’s not like it’s a surprise or anything like that. 🙂 We buy presents through the year as well, it can be quite a savings vs. waiting til the bitter end.

    John S @ Frugal Rules

    December 4, 2012

  8. These are great tips. I always find myself dreading holiday shopping. This is the first year we’re cutting back quite a bit (we usually over-do it). But, I always wait until the last minute – I just can’t bear to think about the holidays before December 1st! Bad, I know. 😉

    Little House

    December 5, 2012

  9. Dave Ramsey said it well: “Christmas is not an emergency! It comes the same day, every year!”

    I am like Pauline’s parents- I have a toy closet in the basement that is filled with toys that are used for Birthday presents (just having B-day presents on hand has saved us hundreds of dollars) and Christmas. I buy toys when they are on clearance. Then, we end up spending between $100-200 the month of December for cards, baking supplies, and other gifts. It works out well for now!

    Eschewing Debt

    December 5, 2012

  10. @LH-Thanks. I hate shopping as well and try and do as much online as I can. Great that you’re cutting back. Though, you’d be surprised at how helpful it can be to shop throughout the year and usually at a good savings.
    @E Debt- I could not agree more with Dave Ramsey in this case. We’re much the same in that we usually have a nice little stockpile of little gifts that we accumulate throughout the year. It saves us money AND we have to do less shopping come Christmas time…Double Win! 🙂

    John S @ Frugal Rules

    December 5, 2012

  11. That’s funny: my wife has no interest in a Caribbean cruise. She only wants European cruises… I think if we get her on the boat, she’ll love the cruise no matter where it’s at!


    December 5, 2012

  12. @Joe – Have you and your wife been on a cruise before? I highly recommend them. You’re right in that once you get your wife on the ship she’ll love it!

    John S @ Frugal Rules

    December 5, 2012

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