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How much of my income should I spend on Christmas?

The holiday season is incomplete without shopping. However, it can also be stressful if you are already struggling to meet ends. So how much of your income should you spend on Christmas?
How much of my income should I spend on Christmas?
Christmas shopping can drain your wallet before you know it. Understanding the percentage of income that most people spend on Christmas gifts can be helpful to plan for the season.
In this article

Christmas is undoubtedly the best time of the year. The holiday is the season of joy, the time we gather with family and exchange gifts. And the holiday season is incomplete without shopping. However, it can also be stressful if you are already struggling to meet ends. So how much of your income should you spend on Christmas?

Sadly, many don’t enjoy the holiday season because of the financial aspect. But don’t worry! You can still have a memorable holiday. Understanding the percentage of income that many people spend on Christmas gifts can be helpful to plan for the season.

what percentage of income should be spent on christmas

Unfortunately, there’s no one-size-fits-all answer to what percentage of your income you should spend on Christmas. It depends on a variety of factors specific to your financial situation and priorities.

Here are some examples of how Christmas spending might translate to percentages of income, based on different scenarios:

Scenario 1: Stable income, moderate savings:

  • Income: $4,000 per month
  • Essential expenses: $2,000 per month
  • Non-essential expenses: $500 per month
  • Savings goal: $500 per month
  • Gift list: 10 people with budgets of $50-$100 each
  • Celebrations: Hosting a small dinner for close family (approximately $200)
  • Decorations and food: $100-$200

Christmas spending estimate: $1,000-$1,500 (gifts, celebrations, decorations, food) Percentage of income: 2.5%-3.75%

Scenario 2: Lower income, limited savings:

  • Income: $2,500 per month
  • Essential expenses: $1,800 per month
  • Non-essential expenses: $200 per month
  • Savings goal: $100 per month
  • Gift list: 5 people with budgets of $20-$50 each
  • Celebrations: Attending a church Christmas potluck (minimal cost)
  • Decorations and food: $50-$100

Christmas spending estimate: $250-$350 Percentage of income: 1%-1.4%

Scenario 3: Higher income, strong savings focus:

  • Income: $8,000 per month
  • Essential expenses: $3,000 per month
  • Non-essential expenses: $1,000 per month
  • Savings goal: $3,000 per month
  • Gift list: 5 people with budgets of $100-$200 each, focusing on experiences or charitable donations
  • Celebrations: Attending a local holiday play ($50 per person)
  • Decorations and food: $200-$300

Christmas spending estimate: $800-$1,000 Percentage of income: 1%-1.25%

how much should you spend on christmas gifts

Most experts say that you should not spend more than 1.5% of your annual family gross income on gifts. If you frequently have deductions in your gross pay, you’ll be spending more than 1.5% of what you take home as cash.

How Americans spend their income on Christmas

Individuals whose total incomes are $100,000 spend around $800 on holiday shopping. For those who make less than $100,000, the spending was less than $300. However, this would vary every year depending on the increase or decrease in income and expenses.

Budgeting isn’t hard but makes a difference

Since holiday shopping is necessary spending during the year, you could add all the Christmas expenses (tree and decorations, gifts and wrapping paper, and travel costs for visiting your friends or family) right from the start of the year. No matter how much you spend during Christmas, this expense will not come under essentials. And you cannot avoid spending during the holidays as well.

Therefore, it’s advisable to include or create a separate budget for holiday spending. You can save an amount every month depending on your purchase bills from previous years. After knowing how much you should save to shop during Christmas, schedule an automatic transfer to a savings account with interest. You will also get some interest during the year. 

Homemade gifts are the trend

If you wish to cut down on Christmas spending, you can consider making homemade gifts. These not only cost low but are have more value because of the time and effort you have put in. They are simply irreplaceable. These include homemade cookies, greeting cards, photo albums, and scented candles. You can also give coupons you have that might be useful for someone. 

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Picture of Richard Samuel

Richard Samuel

E Richard Samuel loves learning. From finding out the newest food in town to traveling and writing, he loves learning about everything. When he’s not writing, he’s probably trying to master the piano or watching food reviews.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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