How Much to Spend on Christmas Gifts

How Much to Spend on Christmas Gifts

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Image: – – Macho Spouse


RobSitePic.jpgWhatever your Winter Holiday tradition, now is the time when many cultures have historically livened up the dark days of winter (in the Northern Hemisphere) with celebrations of community, charity, and gift-giving*.  Going into debt, however, should not be a part of your tradition.

How much should you spend on Christmas?

I'm big on using percentages when budgeting.  Except for the really, really poor or really, really rich, it makes sense to me that if Martha gets paid 50% more than George, then Martha can spend 50% more than George.  That generally goes for housing, cars, or Christmas presents. In other words, don't try to “keep up with the Joneses,” especially if you get paid less than the Joneses.  That's the idea behind the 60% Budget: keep regular, monthly expenses down to 60% of your gross income, so you can save 10% each towards retirement, long-term savings, and short-term savings; the last 10% is 'fun money' for Starbucks, beer, wine, pizza, McDonald's, toys, etc. Ideally throughout the year you've saved up enough in your short-term savings to pay for Christmas, even after you've paid for oil changes, shoes for the kids, and a trip to the beach over the summer.


Navy Federal Credit Union has a special type of account to help you save for next year's Christmas.  It's called the Custom Club® Account.  You can start the account with as little as $5, contribute as much as you'd like, whenever you like, and it earns about 3 times the interest of a regular savings account (.75% vs. .25%).  It's like a certificate of deposit in that you can't withdraw the money until the maturity date, but the good news is: you pick the maturity date -- Black Friday, perhaps?  But what if you've made it to this point in the year without anything saved?  Should you charge it?  Go (deeper) into debt?  Borrow from your retirement fund?
Best case: skip the Starbucks, the Pizza Hut, the package store** and all your other 'fun money' spending this month and use that to pay for gifts.  An E-5 over 4 years gets about $4,000 in gross pay per month. Spending 10%, or $400, would be the max limit I think, even a little high unless you lived like a monk for a whole month. 
You could skip contributing to your retirement account, such as the Thrift Savings Plan (TSP), for a month, but it might prove costly.  Forty years from now, the $400 you didn't save in the TSP could be worth $9,000 due to the power of compounding.***  Borrowing from your TSP account is almost never a good idea, again because of the lost period of compound growth.

Going deeper into debt by adding to the carried balance on your credit card is another bad idea.  With few exceptions, the unsecured debt of a credit card costs you 15%-25% or more.  Using a credit card is not intrinsically bad however.  Ideally you'd only use your credit card to buy things you've already saved for.  Then you can pay off the credit card when you get the bill.  Credit cards often give you purchase protection and fraud protection not available when you use a debit card; that's why in most cases I recommend using a credit card when making an online purchase.

There are some good credit card deals out there available only to service members.  For example, USAA will reduce your credit card interest rate to 4% for a year if you are deployed or when you PCS. Pentagon Federal Credit Union (PenFed) offers the Defender American Express only to service members and veterans; it has an introductory APR of 6.99% for 5 years (!), and a balance transfer rate of 4.99% (!!).

If things are really bad for you financially, consider asking for some help.  Kate Kashman has concise post about charitable organizations that want to help families during the holidays.  Many of you probably know that the Marine Corps Reserve participates in Toys for Tots every year.  They assist families in need (civilian or military) with food, clothes, and toys for the holidays.  If you're having trouble paying for basic living expenses such as rent, food, gas, or clothing, visit the Navy-Marine Corps Relief Society****, Army Emergency Relief, Air Force Aid Society, or Coast Guard Mutual Assistance.  They are all charitable, non-profit organizations that operate on donations, primarily from service members themselves. 
Finally, watch out for the long pay period this month.  As Kate points out, the official, regular pay-days this month are 13 December and 31 December.  That's 18 days from paycheck to paycheck; plan for it so you don't come up short.

*Christmas is obviously the predominant religious and secular winter holiday in America. I do not endorse the tyranny of the majority, but in the interest of brevity I'm not going to type out every wintertime cultural/religious celebration throughout this piece. You can air your grievances about me at your own Festivus celebration.
**that's the Class VI for you Army and Air Force types
***40 year's growth at 8.1%, or 10% growth with 1.8% inflation
****I regularly volunteer as a caseworker at NMCRS


About the Author:  Rob Aeschbach is a male military spouse who spent 12 years as an active duty Marine before becoming a Navy spouse. Since then he has been a stay-at-home-dad for more than 10 years, served in the Marine Corps Reserve until retirement, and started a personal finance blog. You can find him at

See also...

image for Top 3 Military Base Locators

Top 3 Military Base Locators

Whether you are new to military life as a civilian male military spouse, or you have been in the military life for years, you should know where military installations are located (epecially if your spouse just received orders).

Find Military Bases with these Military Base Locators. Use these Base Locators to Find Military Installations Around The World.

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Sesame Street and USO Tour - Japan and Korea

SesameUSO.jpgYEAH SESAME STREET!  This tour is still going on for those in Japan and Korea.  Could be a great way to spend an afternoon with your family!


The tour which begins at Eielson Air Force Base in Alaska on May 29 and will visit 42 bases in 8 European and Pacific countries over the next six months.  The organizations hope others will be inspired to learn more and suggest these five simple actions everyone can do to support military families:
1.        Volunteer at one of the more than 160 USO locations around the world and discover ways you can take action locally.
2.        Offer to help a military family on the home front who live on or off base.  Whether you see that their lawn needs to be mowed or garbage cans taken in, helping with simple household chores and errands can really relieve some of the stress a family may be feeling.
3.        Teach your child how they can help support military kids in their school by visiting and or
4.        Lend an ear to listen to a military spouse as sometimes just having someone there to vent to or talk to when you may feel all alone can be the greatest support of all.
5.        Say thank you to a military member and their family for their service, sacrifice and strength.  Our troops and their families make sacrifices so we don't have to and those two simple words say so much.
“There is nothing that comes close to the feeling you get when you see the smile on a child's face at our Sesame Street shows.  I knew we had something very special the first time I saw the smiles of our military families, and here we are five years later, celebrating a tour that that has traveled the globe three times over and is about to do it again,” said Sloan Gibson, USO President and CEO.  “The USO is proud to be on Capitol Hill celebrating the tour's fifth birthday and assembling care packages for troops overseas.  There is no better way to commemorate such a momentous occasion than IN our nation's capital and WITH our friends at Sesame Street.” 
The longest running tour in USO history, the Sesame Street/USO Experience for Military Families has taken its message to more than 368,000 troops and military families, and performed 631 shows on 145 military installations in 33 states and 11 countries.  In 2011,Sesame Street and the USO introduced a brand new character named Katie – a military child experiencing the stresses of moving as her parents are transferred to a new duty station.  Last year, Katie and her Sesame Street pals visited 67 military bases and performed 204 shows stateside.
 “Sesame Street has so much admiration and respect for our military families, we feel privileged to partner with our friends at the USO and be a part of this special USO Care Package event,” said H. Mel Ming, Sesame Workshop President and CEO.  “This is a great way to show our continued support to our service men and women and to celebrate five years of bringing our resources and the Sesame Street/USO Experience to Military Families to installations around the world.”

Operation USO Care Packages contain vital items troops use every day, from prepaid international phone cards and snacks to travel-size toiletries and comfort items.  Designed as a way for America to say 'thank you' to our troops and their families overseas as well as to unite communities, today's Care Packages included a special gratitude card from Cookie Monster as well as a personal note to troops signed by USO Caucus Co-Chairs, Reps. Jeff Miller, R-Fla., Tim Walz, DFL-Minn., Howard (Buck) McKeon, R-Cali., and Adam Smith, D-Wash.
Since 2003, the USO has delivered 2.3 million care packages to bring a touch of home and necessities to active duty military serving all over the world.  USO Care Packages are distributed to troops traveling through the USO's more than 160 locations worldwide as well as to troops serving overseas. 
Whether on the frontlines, with their loved ones, in recovery or in remembrance, the USO and Sesame Street are adapting to meet the needs of those who need us most.  Operation USO Care Package and The Sesame Street/USO Experience for Military Families are just two of the ways we can help them navigate life's challenges. To learn more Operation USO Care Package  To learn more about the Sesame Street/USO Experience for Military Families or check for the latest tour info visit



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