Tim Allen was crowned the ultimate Scrooge in the 2004 film "Christmas with the Kranks" when he proposed to skip Christmas altogether. His costar Jamie Lee Curtis initially balked, but when he began adding up how much they could save – and spend on a tropical vacation instead – she began listening. So how much money could you save by skipping Christmas this year? And what could you do with it instead? Let's take a look.

The single biggest category of Christmas spending is gifts. This year the National Retail Federation projects that spending on gifts will drop only slightly, after a dramatic decrease of over 30% during the 2008 holiday season. Last year the average American spent the following:

Gift Recipients Amount
Family members $431
Themselves $119.82
Friends $94.52
Miscellaneous $43.50
Co-workers $26.70
Total $750.68

According to the annual Gallup poll on holiday spending, last year's spending on gifts was down from a high of $862 in 2005. So if you choose to forgo all the gift-giving, you'll pocket, on average, approximately $750.68. (Learn more about Christmas budgeting in Holiday Spending Or Spending Holiday?)

Christmas Tree
Entrepreneurs began selling the ubiquitous Christmas tree commercially in the U.S. in 1850. Today, whether you choose to venture into one of the nation's 12,000 cut-your-own Christmas tree farms or pick up a precut one at your local hardware store, a real tree will set you back approximately $41.50.

Cards and Postage
Despite the advent of eCards, sending handwritten cards by snail mail is a long-standing tradition that is not going to die quickly. The average American family spent $32.43 on cards and postage to mail Christmas notes in 2008. (Learn more in Keep Holiday Debt From Snowballing.)

While spending on Christmas flowers doesn't come close to Valentine's Day or Mother's Day, families still spend an average of $22.61 on holiday floral arrangements, poinsettias, etc.

Food and Candy
Christmas is a celebration, and celebrating in America requires food. However, the National Retail Federation found that Americans only cited spending $95.04 specifically on holiday food and candy in 2008. If that number sounds low to you, maybe the Information Resource Inc. holiday poll results reflect your spending – they reported that 94% of survey respondents plan on limiting their holiday food budget to $500 and 90% are planning on spending no more than $200 on holiday beer, wine and spirits.

Decking the halls isn't free. On top of your Christmas tree cost, if you're like the average American, you're looking at spending in the neighborhood of $51.43 on tinsel, lights and ornaments.

Traveling to be with family and friends over the holidays can easily become the largest budget item for a family's holiday spending. According to a 2008 Maritz poll surveying Americans about their holiday travel plans and spending, respondents earning between $35,000–250,000 who chose to travel spent an average of $960.50.

Adding It Up

Category Spending
Gifts $750.68
Tree $ 41.50
Cards and postage $ 32.43
Flowers $ 22.61
Food $ 95.04
Decorations $ 51.43
Subtotal $993.69
Travel $960.50
Total ( including travel) $1,954.19

Choosing to pass on Christmas could save your family a pretty penny – just about $1,000 (if you weren't planning to travel) and nearly $2,000 if you normally travel but choose to stay at home this year.

Conclusion: The Gift of Savings
Now that you've saved nearly $1,000, it's time to put that money to work. Here are some ideas for what you can do with your new savings:

  • Open a high-yield checking account. Royal Bank of Missouri is offering new accountholders a high-yield checking account paying an attractive 4.30% APY. Invest your $993.69 and if you meet their terms, including 10 point of sale debit transactions and at least one monthly automatic payment, you could wind up with $1,036.42 - if you keep at least that initial amount invested.

  • Invest in a CD. If you invested that money in a 12-month CD paying 2.10% APY through ING Direct (that provides FDIC insurance), you would earn $21 for a total of $1,014.56 toward creating an emergency savings fund or accumulating some cash for next year's holiday expenses.

  • Start a high-yield savings account. By depositing that money in a savings account offering 2.25% APY with SFGI Direct, the online division of Summit Community Bank, you would have $1,016.05 this time next year.

  • Pay down high-interest rate credit card debt. If you're not paying off your credit card balance in full each month using that $993.69 (or $1954.19) to at least pay it down – or preferably pay it off completely – will save you money on interest and be viewed favorably by your credit card company.

For more tips on how to save during the holidays, check out Avoid Overspending This Holiday Season and Sneaky Strategies That Fuel Overspending.

Related Articles
  1. Personal Finance

    Seven U.S. Destinations You’d Swear Were Overseas

    If you can't stop thinking about safety (or your budget) as you plan your vacation, try these seven very-exotic-feeling places right here in the U.S.
  2. Retirement

    Roth IRAs Tutorial

    This comprehensive guide goes through what a Roth IRA is and how to set one up, contribute to it and withdraw from it.
  3. Stock Analysis

    Are U.S. Stocks Still the Place To Be in 2016?

    Understand why U.S. stocks are absolutely the place to be in 2016, even though the year has gotten off to an awful start for the market.
  4. Investing News

    U.S. Recession Without a Yield Curve Warning?

    The inverted yield curve has correctly predicted past recessions in the U.S. economy. However, that prediction model may fail in the current scenario.
  5. Investing

    Retirees: 7 Lessons from 2008 for the Next Crisis

    When the last big market crisis hit, many retirees ran to the sidelines. Next time, there are better ways to manage your portfolio.
  6. Options & Futures

    What Does Quadruple Witching Mean?

    In a financial context, quadruple witching refers to the day on which contracts for stock index futures, index options, and single stock futures expire.
  7. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  8. Personal Finance

    Oil Prices Are Down, Airfares Aren't. What's Up?

    Oil is down to $30 a barrel. But consumers are still hit with fuel surcharges on airline tickets.
  9. Options & Futures

    4 Equity Derivatives And How They Work

    Equity derivatives offer retail investors opportunities to benefit from an underlying security without owning the security itself.
  10. Fundamental Analysis

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
  1. What is a derivative?

    A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, ... Read Full Answer >>
  2. What is after-hours trading? Am I able to trade at this time?

    After-hours trading (AHT) refers to the buying and selling of securities on major exchanges outside of specified regular ... Read Full Answer >>
  3. Why are most airplane tickets nonrefundable?

    Airplane tickets are generally nonrefundable, because the majority of tickets sold are discount tickets. In exchange for ... Read Full Answer >>
  4. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  5. Do interest rates increase during a recession?

    Interest rates rarely increase during a recession. Actually, the opposite tends to happen; as the economy contracts, interest ... Read Full Answer >>
  6. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center