December 8 2009|01.04 PM UTC

Jonathan Rivers

12 Tips for a Great Christmas on a Small Budget

Category: Personal FinanceTags: , , , , , , ,

Christmas often comes at a high price. Between gifts, wrapping paper, travel and parties, making Christmas happen can spell financial ruin unless you go into it with a plan. But this year can be different. With some intelligent cost-cutting and creative thinking, Christmas need not drain your wallet this year – or be any less satisfying than in years past. Read on and apply these 12 tips for enjoying a great Christmas on a small budget!

Chop Down Your Christmas Tree

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Christmas tree farms offer a tremendous holiday savings opportunity to anyone willing (and able) to put in work. For a low fee – often as little as $25 – a family can chop down its own tree from a Christmas tree farm, strap it to their car or truck and take it home. A ready-cut tree, on the other hand, can cost anywhere from $75-$100 according to Aside from the savings, there are few bonding experiences quite like a father and son cutting down the family Christmas tree together on a brisk winter afternoon. The tree you take home will create memories that outlast any of the gifts underneath.

Buy Gifts For Fewer People

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Resist the urge to dismiss this tip as unkind as it is anything but. The reason to buy gifts for fewer people is not Scrooge-like stinginess, but sheer practicality. Face it – most of us, looking back on everyone we’ve bought gifts for in the last five years, can probably name several people that could have been harmlessly skipped over. For example, is it really necessary to buy a tacky, $15 “at least I got him something” gift for a distant uncle you never see? Would Christmas self-destruct if you only gave to those you truly felt compelled to? No, not at all. But the extra cash you save from not buying pointless gifts could make a real difference come the New Year. As you decide whether to buy for various people, always keep in mind that gift giving is voluntary. There is no need to buy for anyone you don’t want to.

Develop a Gift Budget For Those You Do Give To

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The biggest reason people implode financially during Christmas is failure to plan. In contrast, someone who decides what they can spend in advance and spends only that is never caught off-guard when the bills come. This, then, is arguably the most important tip of all. No, it’s not sexy. You can’t brag about disciplined spending the way you brag about deferring payments for a year or finding an exclusive sale. But simple adherence to a realistic gift-giving budget will virtually guarantee that you spend less and minimize stress throughout the holidays. Come up with a number and stick to it – it’s that simple.

Go Shopping Solo

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Some of us will need every motivational trick in the book to stick to the budgets we create. For these people, shopping solo is the smartest approach. Something about shopping with a companion inspires us to spend more, whether it’s to out-do them or merely because having them along takes your “eye off the ball” that is your Christmas gift-giving budget. Instead, do your Christmas shopping alone for the same reason you go grocery shopping alone: because it gets you in and out without any “surprise” purchases.

Don’t Throw Extravagant Parties

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Lots of people feel pressured to throw flashy Christmas parties when family and friends are attending. Spending gobs of cash on elaborate decorations and exquisite food and beverages is commonly rationalized as “not letting everybody down.” However, such thinking forgets what really matters about Christmas parties. All anyone really expects or wants is a comfortable place to catch up and spend quality time with their family. By all means – stock the kitchen with refreshments everyone will enjoy, but forget the idea that you must move heaven and earth to throw an unforgettable Christmas party. People are more likely to remember the conversations they had or the long-lost relatives they ran into than whether you had brand name chips or soda.

Buy Online When Possible

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Buying Christmas gifts online makes sense for innumerable reasons unrelated to price – convenience and comparison shopping foremost among them. However, online shopping is also generally the most cost-effective way to buy your gifts. Online retailers like Amazon offer prices you wont find in any store, and many of them offer holiday coupons, rebates, and discount codes for the shopping season. And provided you don’t wait, you don’t even need to pay extra for speedy shipping. Instead, use this handy Postal Service tool to find the “extra 4 digits” of your ZIP code that route mail to you faster. Once the tool spits out your complete ZIP code (say, 06614-5026), use that when ordering online to get your order up to 2 days faster than before. (Most people don’t know about or use this at all!)

Travel Efficiently

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Poorly planned, holiday travel can take an enormous bite out of your money. This is true for the same reason waiting to buy gifts is more expensive: waiting leaves you with only the flight times and tickets that no one else wanted. Whether it’s because those times and flights are inconvenient or too expensive, the bottom line is that you’re picking over scraps. Don’t get stuck in that position. If you’re flying, spend today or tomorrow comparing prices and order your tickets. If you’re driving, use whichever vehicle gets better gas mileage and/or see if you can carpool with anyone else going to the same place. Simply thinking about your trip a few weeks early will get you thinking about how to do it for less.

Take Advantage of Free Gift Wrapping From Retailers

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For gifts you can only or would rather buy in person (like clothing or candles you want to smell first), inquire about free gift wrapping at the store. Most retailers provide this service from the beginning of December all the way through Christmas Eve, and it’s one less thing you need to buy. Plus, let’s face it – wrapping gifts is a real pain in the neck. Foolish is he who passes up the chance to save money and avoid this cumbersome chore all in one shot!

Substitute Expensive Gifts For Thoughtful, Inexpensive Ones

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We recently ran an article on inexpensive, thoughtful gifts that are better than expensive brand-name ones. And while the article took some criticism from those committed to expensive gifts, plenty of commenters said they would love getting the gifts we named. Scrapbooks, memory boxes, artifacts from first dates, and books are just a few of the hand-chosen gifts that both cost less and mean more than anything you can pull off a shelf. You need not forgo brand name gifts completely, but substituting even a few of them can go a long way toward keeping money in your pocket after Christmas.

Refuse to Take on Debt For Holiday Expenses

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Another unsexy but proven strategy for making Christmas less expensive down is refusing to go into debt for it. Simply put, there is no defensible reason to spend money you don’t have on a voluntary, sentimental holiday. Gift giving isn’t a law, it’s a choice. Beyond that, you should avoid Christmas debt for a much more practical reason. Buying on credit has a long history of leading people to spend more than if they were paying directly and immediately. Therefore, buying gifts, party supplies or airline tickets on credit can equate to a higher Christmas bill for no other reason than how you purchased these things. Instead, try as hard as possible to spend only what is reasonable and appropriate – and currently in your possession.

Aggressively Seek Out Sales & Coupons

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One of the simplest ways to save money during Christmas is aggressively searching for sales, discounts, and coupons. Many of us talk a big game about “shopping smart this year” only to go into stores and shop in the same haphazard, indiscriminate fashion we do every other year. If you want to save money, you have to behave differently than people who waste money. First and foremost, this means clipping coupons (when they actually represent true savings), utilizing coupon codes, and taking advantage of known sales even when it means disciplining yourself to wake up early for them. Whatever pains you incur now will be worth it when Christmas is over and tens or hundreds of dollars remain available for other things.

Forget About Replacement Warranties & Service Contracts

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Generally speaking, the replacement warranties and service contracts cashiers hock to you at the register are a waste of money. More often than not, the price of the warranty (say, “only” $20) is pretty much what it would cost to repair whatever you’re buying if it actually breaks someday. Better to wait for someday than pay for a potentiality that is probably unlikely to occur. If you’ve fallen for these sales pitches in the past, don’t worry – just be smart enough not to fall for them anymore, and you’ll save big.

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{ 3 comments… read them below or add one }

Peg December 10, 2009 at 9:43 am

These are all great tips. In the tip about shopping online, you mention using ZIP+4 in the shipping address. I always try to do that, but I have found that more than a few websites are not set up to accept ZIP+4. Too bad, because it really does make a difference.



Anonymous December 15, 2009 at 1:24 am

I have to disagree about the last tip. I bought a DSLR Camera from HHGregg a couple years ago and purchased the $5 “insurance” plan. THANK GOODNESS I did because about a week later I DROPPED THE CAMERA and broke the lens. I took it back to the store and they gave me a brand new camera, no questions asked! If insurance or extended warranty is relatively cheap, GET IT!


Loralei December 31, 2009 at 12:15 pm

Love these ideas! I save for Christmas using my credit union’s Christmas Club. The money goes straight out of my paycheck into the account so I never miss it. I set aside enough for donations, gifts, Santa, holiday entertainment, everything related to Christmas.

Using a spreadsheet, I determine an amount to spend on each person and I stick to that amount! The spreadsheet also helps me track where the gift is – being shipped, hidden in closet, needs wrapping, under the tree, etc.

Lastly, I shop online through UPromise. Each gift helps build my children’s college fund. WIN-WIN!

Obviously, I’m a little OCD. OK, alot! This system works well for me and keeps me from stressing over the holidays.


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