Start with everything, not just gifts
Gifts are only part of the total. Make a list of every category that comes up between now and the new year: gifts, travel, food and hosting, decorations, cards and postage, events and parties, charity, and a small catch-all for things you forgot.
People often leave out shipping, wrapping, travel and the extra groceries, which is why the total ends up higher than the gift list suggested. Write down what you spent last year in each category if you can find it. Last year's statements are the most honest starting point.
Pick the total first
Decide what the total will be before you start shopping, and base it on money you can set aside, not on what the wish list adds up to. Then divide it among the categories and give the larger ones, usually gifts and travel, firm caps.
If the wish list is higher than the total, the list changes, not the total. Cutting a few names, switching to a shared gift or setting a per-person limit are common ways to close the gap.
Worked example
All figures are invented. A household decides on $3,000 for the season. It plans $1,200 for gifts, $800 for travel, $500 for food and hosting, $200 for decorations and cards, $150 for events and $150 for charity. That adds up to $3,000.
Four months remain before the holidays, so setting the money aside means $3,000 divided by 4, or $750 a month. If $750 a month is too much, the household has two honest choices: lower the total, or accept that part of the spending will go on a card.
What putting it on a card really costs
Using a card is not a problem on its own if the balance is paid off quickly. The cost comes from carrying a balance. Suppose $1,200 of the holiday spending is charged at an example 24% annual rate, which is 2% a month, and the household pays $200 a month.
It takes seven payments to clear the balance, six of $200 and a smaller final payment, and the interest adds up to about $91.57. The same $1,200 set aside in advance would have cost nothing extra. Your own card's rate and terms are on your statement, so use those figures instead of the example.
Keeping track while you shop
Write each purchase down with the category and the amount on the day you buy it, in a notes app, a notebook or a spreadsheet. Check the totals weekly, and stop spending in a category when it hits its cap.
Keep a running list of who is still unbought for, and a ship-by date for anything that has to be mailed. Late fees for rush shipping are one of the easiest costs to avoid.
After the season
Compare what you planned with what you spent in each category and write the difference down. Next year that note is the first thing you will want, and it makes the next budget faster.
If you ended up carrying a balance, treat paying it off as the first item in your January budget. The CFPB website has plain-language guidance on credit cards and on finding a nonprofit credit counselor if the balance is hard to manage.
Try the calculator
Run your own numbers in the free savings goal calculator. It works in your browser and nothing you enter is saved or sent.
Sources
Common questions
How much should I spend on the holidays?
There is no standard amount. It depends on what you can set aside without going into debt, so choose the total from your own budget.
Should I use cash or a card?
Either can work. Cash makes limits obvious, and a card works if you track spending and pay the balance in full.
When should I start saving?
As early as you can. Dividing the total by the months you have left shows the monthly amount.
This guide is general information, not financial, tax or legal advice. Rates, fees and rules change, so confirm current terms with the lender, store or agency involved. All dollar figures are invented examples.