Best Frugal Christmas Ideas to Save Money During the Holidays

From buying gifts for your loved ones to accepting invites to holiday parties, there are so many expenses that come along with the Christmas season!

That leads many families to wonder how they can be frugal at Christmas.

While it may not be easy, being frugal during the holidays is possible. To have a frugal holiday, you just have to get a little bit creative!

From coming up with ways to save money on your holiday purchases to looking for cheap or free Christmas gift ideas, there are tons of amazing ways to be frugal during the Christmas season.

frugal christmas ideas

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How Can I Be Frugal at Christmas?

Finding ways to save money during the holidays may seem like an impossible task.

With all the activities to enjoy and a mile-long shopping list, having a frugal holiday might come across as a far-fetched idea.

But I have some good news for you!

There are a variety of easy ways you can celebrate the Christmas holiday without spending a ton of money in the process:

  • Create a Christmas budget: A simple way to stay on track during the holiday season is to create a budget specifically for Christmas. This Christmas budget will be separate from your regular monthly budget to allow you to focus solely on your holiday spending.
  • Start saving early: Christmas comes around at the same time every year, which means you have plenty of time to plan ahead. Taking the time to set aside money each month for Christmas is one of the best ways to avoid going into debt during the holidays.
  • Find free or cheap Christmas activities: With so many parties and events going on during the holiday season, you could easily spend a ton of money on Christmas activities alone. To have a frugal Christmas, it’s important to find free or cheap activities to entertain your family to save the money you would be spending for other things.
  • Look for frugal Christmas gift ideas: The biggest expense of the holiday season is usually Christmas gifts. That means you’ll need to get creative when planning your holiday shopping list if you want to have a frugal Christmas this year. Finding free or cheap gift ideas is one of the best ways to save money on the holiday and avoid going into debt as you cross people off of your shopping list.

In this article, I’ll go into all of these simple ways and tips in more detail to help you avoid overspending during your celebration.

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How to Create a Christmas Budget

Creating a Christmas budget is one of the best ways to keep from overspending during the Christmas season. A Christmas budget is a spending plan to help you stay on track during the holidays.

The plan works like a traditional monthly budget and includes line items for each of your holiday expenses.

In addition to helping you keep track of your Christmas spending, a holiday budget can also help you see how much money you need to set aside each month to ensure you have all your Christmas expenses covered when the holiday season rolls around.

A Christmas budget is made up of two to three different categories, depending on your typically holiday spending. To create a holiday budget, you’ll need to record your:

Gift Budget

The biggest part of setting up a holiday budget is taking the time to outline how much you’ll be spending on gifts.

This section of your budget will take the most time and effort to create, but it’s an essential element to having a frugal Christmas. Your gift budget should include the:

  • Name of every person you want to purchase a gift for this Christmas
  • Amount of money you will spend on each person’s gift
  • The gift you purchase for that person
  • How much you actually spent on the present

Start by taking care of the first two elements of the budget:

  • Listing the names of everyone you plan to buy for and how much you think you’ll spend on each person.
  • After you record all the names and amounts for your holiday gift purchases, add up all the numbers to get a final total.
  • Then, determine if this number is affordable or if the amounts need to be adjusted to fit within your budget.

Once you have your gift budget laid out, you can use it as you shop to keep track of your actual spending.

Start by writing down gift ideas next to each name on your list. As you make purchases, record the actual amount you spent on each gift, noting whether you spent more or less than your budgeted amount.

If you spend more or less than you budgeted for, you’ll need to adjust your estimates on other gifts to ensure your budget stays balanced.

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Activity Expenses

In addition to keeping track of how much you’re spending on gifts during the Christmas season, you’ll also need to budget for holiday activities.

This budgeting category could include a range of different items in it, depending on what activities you do during the holiday season.

Your Christmas activity budget could include line items like:

  • Christmas parties
  • Holiday decorating, like purchasing a Christmas tree or new lights
  • Additional food expenses related to the holidays, like ingredients for a Christmas dinner
  • Christmas entertainment, like lights shows or concerts

While this budgeting category may not be as large as your holiday gifts budget, it shouldn’t be ignored.

Keeping track of your miscellaneous holiday expenses is important because these small items can quickly add up to big expenses. Making sure you stay on track when it comes to holiday expenses other than gifts can help you avoid overspending during the Christmas season.

Holiday Travel

Although not every family travels for the holidays, if your family takes a trip every year, it needs to be included in your Christmas budget.

Travel can be a big expense – especially during the holidays – so it’s essential that you plan for those expenses before the holiday season arrives.

Record these travel expenses to ensure you have enough money set aside for all your Christmas trips:

  • Transportation expenses, like plane tickets or gas for driving
  • Lodging expenses if you plan on staying in a hotel
  • Food while traveling
  • Travel supplies, like toiletries
how to be frugal at christmas

How to Save for Christmas

After completing your holiday budget, you’ll know exactly how much money you need for your Christmas celebration. After that, it’s time to start saving!

Setting aside money throughout the year to spend on Christmas gifts and activities is the best way to avoid going into debt during the holidays.

That means you’ll need to take the time to save money each month leading up to Christmas to ensure you have plenty of spending money during the holiday season. Try these saving methods to help you create a Christmas fund for your family:

  • Create a line item in your regular budget: One of the easiest ways to start saving for Christmas is to add a line item to your regular monthly budget for Christmas savings. Determine how much money you’ll need to save for the holidays, then divide that number by 12 to see how much money you should set aside each month to reach your savings goal.
  • Reduce your spending: If adjusting your budget to include a line item for the holidays is difficult, it may be time to take a look at your spending. Go through your budget line by line to see where you can adjust your spending to make room for holiday savings. Some categories to consider cutting are your grocery spending and entertainment expenses. Here are tips to reduce your grocery spending and here’s how to entertain on a budget. Continue adjusting the numbers until you can accommodate the extra line item to save money for Christmas.
  • Create a Christmas savings account: To keep yourself from spending the money you’re setting aside for the holidays, it’s a good idea to create a separate checking or savings account specifically for the holidays. You can transfer money into the account each month and use the money in the account for all your holiday purchases.
  • Do a spending freeze: One simple way to set aside money for savings is to do a no-spend weekend or week. At some point during the year, dedicate a certain number of days to a spending freeze in which you don’t spend any money, except for paying essential bills. After your spending freeze, set aside all the money you saved from not spending to be used for your Christmas celebration.
  • Earn more money: Finding room in your monthly spending to save for Christmas will be difficult if you’re already on a tight budget. Instead of looking for ways to reduce your spending even more, why not look for ways to earn more money for the holidays? You can ask for more hours at work or look for a side work from home job to help you earn some extra cash to add to your holiday savings account.
  • Sell your stuff: Another great way to find extra money for Christmas is to get rid of stuff you don’t want or use anymore. Take the time to declutter your house and hold a garage sale or list the items online. After you sell something, set the money you earned aside to use for holiday gifts and activities.
frugal christmas gifts

Free (or Cheap) Christmas Activities

When celebrating the Christmas season, one of the best ways to enjoy time with your family is taking part in fun holiday activities.

But there’s no reason to go out and spend money on Christmas activities with your family when there are tons of free (or cheap) ways to have some holiday fun!

These simple free holiday activity ideas are a great way to have a frugal Christmas that’s full of fun.

  • Hop in the car and drive around town to check out all the holiday lights in your neighborhood.
  • Sing Christmas carols. You can head out to sing carols to your neighbors or just stay at home and have a Christmas carol karaoke night.
  • Make gingerbread from scratch, then build your own gingerbread houses using supplies you already have in your kitchen.
  • Have a holiday movie marathon with some of your family’s favorite Christmas movies.
  • String popcorn on a piece of thread to create a popcorn garland for your Christmas tree.
  • Use red and green construction paper to create a paper chain Christmas countdown. Add one link for each day until Christmas, then let your kids remove a link from the chain each morning to count down to the big day.
  • Visit Santa at your local mall for free. They may ask you to purchase a photo, but you can politely decline.
  • Find free holiday events and activities near you buy checking online. Look at your city’s website or on Facebook pages of local groups to find free or cheap activities you can enjoy during the holidays.
  • Get out the craft supplies and make some homemade ornaments for your Christmas tree.
  • Enjoy the snowy weather by heading outside to make snow angels or a snowman with your kids.
  • If there’s no snow in your area, make your own by cutting paper snowflakes and hanging them in your windows.
  • Declutter your kid’s rooms to find gently used toys to donate to a local shelter.
  • Decorate Christmas cards to send to soldiers overseas.
  • Make holiday cookies together. You can enjoy them as a family or deliver batches to your local police and fire departments to thank them for their service.
  • Visit your local library to check out Christmas books, then read a new story every night before bed.
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Frugal Christmas Gift Ideas

While saving money on holiday activities is a great way to cut your holiday spending, we all know that the biggest expense of the holiday season is the gifts.

If you want to have a frugal Christmas, you’ll need to find ways to save money on all your Christmas presents this year.

Follow these simple tips to start saving money on your holiday gift purchases:

  • Set a spending limit on gifts: Saving money on Christmas gifts can be a family affair if you discuss your idea of a frugal Christmas with your extended family. Talk to your family members about setting a spending limit on holiday gifts to ensure everyone is on the same page about the cost of gift-giving. With everyone on board, it will be easier for you to stick to your budget as you purchase gifts for family members.
  • Draw names: Instead of purchasing a gift for everyone in your extended family, consider drawing names to help save money on gift purchases. The next time everyone is gathered together, write each person’s name on a piece of paper and toss all the names in a bowl. Take turns drawing names from the bowl until everyone has one person to purchase a gift for. Alternatively, you could use a free, automated service like Draw Names. I’ve been a part of 2 groups that used this for a secret santa event and it was very easy to use.
  • Do a kids-only gift exchange: Another great way to reduce the number of gifts you need to purchase is to reserve the gift-giving to kids only. Simply remove the adults from the gift exchange this year and put the focus solely on the children.
  • Make your own wrapping paper: Wrapping your gifts can get expensive if you let it. This year, decorate your own wrapping paper with your kids to create a unique gift for everyone on your list. Purchase a roll of brown craft paper, then let your kids use paint or markers to add their own holiday decorations to the paper. Let the paint dry, then use the homemade paper to wrap all your holiday gifts.
  • Purchase gifts ahead of time: Although heading out to buy gifts during Black Friday may be tempting, you’ll probably find better deals on gift purchases at other times during the year. Keep an eye out while you’re shopping throughout the year to find bargains on gifts before the holiday season rolls around. By shopping sales and clearances, you can find great deals on amazing gifts for everyone on your list.
  • Purchase through TEMU. TEMU is a new, up and coming online marketplace where you can purchase all types of items including clothing and accessories, toys and crafts, beauty and jewelry, and garden and sports items. Half of the Christmas gifts I bought this year were from TEMU just because it’s so much cheaper than Amazon, Walmart or Marshalls. I’ve purchased socks, underwear, hats, pants, board games, chapstick, headbands, sunglasses and many more items from TEMU this year. Make sure you check out their lightning deals section for the best frugal Christmas gifts!

What Can I Get for Christmas with No Money?

In addition to saving money on gift purchases, it’s also a good idea to have some gift ideas that are completely free.

This will help ensure you’re able to give everyone on your list a Christmas present without going over budget. Try these simple free gift ideas to mark everyone off your shopping list this year.

Make a gift

One of the best ways to give a gift without spending money is to make a homemade gift.

Think about your talents and come up with a way you can turn those talents into a gift.

Whether you’re great at knitting or love to paint, you can use what you know to create some amazing free gifts for everyone on your list. There are a variety of amazing handmade gifts you could make for your loved ones, including:

  • Accessories, like hats, gloves, and scarves
  • Jewelry
  • Custom t-shirts
  • Painted signs
  • Photo collage
  • Framed photos
  • Soap or bath salts
  • Bath bombs
  • Hot chocolate bombs
  • Recipe box or book
  • Photo books or scrapbooks
  • Written stories or poems
  • Upcycled thrift store finds
  • Candles
  • Beauty products, like lip balm or lotion
  • Christmas ornaments
  • Baking mixes
  • Seasoning blends
  • Planters or decorated flower pots
  • Pillows, blankets, or quilts
frugal holiday gift ideas

Baked goods

Similar to making a homemade gift, you could also head to the kitchen to whip up some baked goods to give as gifts.

Think past the traditional Christmas cookies to create something unique to give as a gift this year. You could make homemade bread, candy, or pastries for your loved ones instead of purchasing a gift.

DIY gift baskets

Creating a homemade gift basket is a great way to give a personalized gift.

And you can make your own basket using cheap supplies you find at the dollar store or grocery store, allowing you to create a custom gift for just a few dollars.


Paying for someone’s subscription for a month is the gift that keeps on giving. Purchase a month of Netflix or Amazon Prime (which includes their movie streaming service!) for a month or a few months for a cheap gift idea!


Do you have an unopened gift sitting in your home that you’ll never use? Wrap it up and give it to someone else! Just make sure you give it to someone other than the person who gifted it to you in the first place.

Offer your services

Instead of making your own gift, give the gift of yourself. You could offer to cook a meal, repair a computer, babysit the kids, or any other service that would be beneficial to your loved ones.

Shop the thrift stores

Check the aisles of your local thrift stores to find unopened items to give as gifts. You can often find brand new toys, appliances, and electronics for a fraction of the price you’d see in retail stores.

frugal christmas present idea

Cheap Christmas Gift Ideas

There are a variety of great gift ideas that you can purchase for your friends and family during the Christmas season that doesn’t cost a ton of money.

These useful cheap gift ideas are perfect for anyone hoping to have a frugal Christmas who still wants to give gifts this year.

  • Board games
  • Picture frames
  • Candles
  • Fleece blankets
  • Movie tickets
  • Journal or planner
  • Books or cookbooks
  • Puzzles
  • Glassware, like wine glasses or coffee mugs
  • Socks
  • Cold weather accessories
  • Pajamas or slippers
  • Pillows
  • Small kitchen items, like towels or utensils
  • Small tools, like a multi-tool or measuring tape

What Can I Do Instead of Gifts for Christmas?

Another simple way to save money on Christmas is to give no gifts at all.

A no-gift Christmas is a great way to set aside the commercial aspects of the holiday and focus on what really matters.

On top of helping you save money, this frugal Christmas idea also allows you to spend quality time with your family away from the hustle and bustle that comes with Christmas shopping.

If you’re worried that a no-gift Christmas won’t be special, try incorporating some of these frugal holiday ideas into your plans to ensure your family has an amazing gift-free Christmas:

  • Focus on family traditions: Take the focus off gift-giving this Christmas by creating memories instead. Come up with some fun family traditions that you can enjoy together to make the holiday season more memorable without the need for gifts.
  • Have a homemade Christmas: Don’t want to take gifts completely off the table? Instead of purchasing gifts for each other, make it a rule that all gifts have to be homemade. Get creative and make a gift for each of your family members, then exchange the homemade gifts on Christmas day.
  • Give experiences instead of gifts: If you want your kids to open something on Christmas morning, consider finding experiences they would enjoy instead of physical presents. You could give your kids movie tickets or a trip to their favorite summer camp instead of new toys this year.
  • Use your Christmas fund for a family trip: Instead of adding to your home’s clutter, consider putting your Christmas savings toward a trip instead of gifts this year. Let your family know that you’ll be going on vacation as the Christmas present to help them get excited about the upcoming trip and take the focus off the fact that there are no gifts to open.
  • Volunteer together as a family: Give the gift of your time this holiday season by spending Christmas volunteering. You can enjoy time together while helping others at a local food pantry, church, nursing home or animal shelter instead of the traditional gift-giving festivities.

Related Frugal Christmas Ideas:

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