Pop quiz!

How much money do you have in your Christmas savings fund?

Wait, what?

You don't have a Christmas savings fund yet?

No worries. I've got you covered.

Whether it's January or July, it's never too early to start thinking about your Christmas budget.

If you're at a loss for how to save money for Christmas, here are some simple steps to get you started so you can avoid credit card debt this holiday season.

Set Your Spending Goals Now

The trickiest part about having a successful, debt-free Christmas is making sure you budget enough.

But how do you know how much is enough? Just how much should you save for your holiday spending?

I like to look back at my previous year's spending to get a rough idea of how much I should save. But if you'd rather start fresh, a good estimate to aim for is 1.5% of your income.

And keep in mind that while we tend to think of Christmas expenses in terms of presents for our family and friends, other holiday-related costs can sneak up on you and sabotage your budget if you don't plan ahead.

Make sure you save money for unexpected costs that can pop up during the holidays too.

Here are some common expenses to keep in mind as you make your debt-free Christmas spending and savings plan.

Gifts and Presents

Thinking about your gift budget means determining how much you want to spend and who you need Christmas gifts for.

Put on your Santa hat and make a list of all the people you plan on giving gifts to, as well as people you might end up needing a gift for.

People you may want to add to your gift list:

• Family (don't forget extended family)

• Friends

• Co-workers

• Teachers

• Classmates

• Neighbors

• Coaches

• Bosses

• Service providers (for example, tips for your housekeeper or mailman)

• Donations

It's easy to get caught by surprise if you're only thinking about those closest to you.

Do a little brainstorming and build up a buffer so you'll be covered just in case you need a gift you weren't expecting.

Also, start tracking any gift ideas as you see them and make a note of the cost.

This will give you not only a better idea of your total gift expenses but also the opportunity to keep an eye out for sales and deals that may come up before the holiday season.

Entertainment Expenses

You may already be planning to get a new outfit for your office holiday party. But what about that ugly sweater you need now that your best friend is throwing a themed get-together?

Maybe you've been nominated to host Christmas dinner this year and need some new dishes for the occasion.

Or what if your Rudolph inflatable won't inflate and the Christmas lights won't light? If you don't want to be the neighborhood Scrooge, you're going to need some new outdoor Christmas decorations.

Here are some entertainment-related holiday expenses to consider adding to your Christmas savings account:

• Party attire

• Food costs

• Decorations (indoor and outdoor)

• Alcohol

• Invitations and party favors if you're hosting something

• Christmas celebrations & special events (light displays, a ride on the Polar Express, etc.)

Travel Expenses

Traveling during the holiday season can be stressful enough without having to worry about every little extra expense.

While you're budgeting out any trips you've got planned, factor in some of these potential costs you may need to save for:

• Baggage fees (for all those gifts weighing your suitcase down)

• Parking fees

• Eating out

• Hotel stays

• Christmas shopping with loved ones

• Souvenirs (we buy a keepsake ornament every time we visit the North Pole)

Postage Fees

As fun as it is to send and receive Christmas cards, it's also an expense I always tend to forget about. And it can be a large one at that.

But even larger is the cost to ship those Christmas gifts.

I can't tell you how many times I've paid more for shipping than for the actual gifts!

My family has made a deal to wrap each other's gifts (depending on who they're for) so we can save on shipping costs by sending things directly.

If you want your gifts to remain a surprise, do the math to see if paying for gift wrap services may be cheaper than shipping.

Set Up a Christmas Savings Category or Account

Now that you have a plan for how much you want to spend this Christmas season, it's time to set aside your holiday savings.

There are two approaches to setting up your Christmas savings fund.

Create a new Christmas category or envelope in your budgeting system.

The first is less complicated, but depending on your level of discipline, it may be easier to "accidentally" tap into.

Keeping your savings in a separate account makes it harder to access until you're ready for it, but it may also have the added benefit of earning a little interest.

I prefer to do a combination of both.

I create a Christmas category in my budget (mostly to track what I've spent). But I also use an app to automate deposits and keep that money out of sight and out of reach.

Do a Budget Sweep

If you're short on time, a great way to build up your Christmas fund is to do a budget sweep.

The idea here is to move any leftover funds from other budget categories into your Christmas savings.

For example, I round up most of our budgeted monthly payments to keep things even. So a $26 monthly expense will usually have $30 budgeted toward it.

Over time, those little overages add up.

When you're ready, you can zero out your non-savings categories and add that extra money to your Christmas savings.

Challenge Yourself

I'm a massive fan of using money challenges to hit your financial goals.

Most of us are convinced we're doing everything we can to save, and the money just isn't there.

But for a lot of us, that isn't the case. We may just be blind to our negative spending habits because they're so routine.

Taking on a savings challenge is a great way to become more intentional with your spending and see how much you can really afford to save, even if you think you have a tight budget.

I've found monthly challenges work best for me. It's just long enough to be effective, but short enough to be achievable.

If you like making savings a game and challenging yourself, here are some ideas to get you started.

• No-spend challenge

• Keep the change/Round-up

• Try a cash diet

These are great ways to save money for any goal.

Find Some Extra Cash

There's only so much you can cut to save money, but there's endless potential to the amount you can make.

If you're looking for more ways to add some funds to your Christmas budget, increasing your income is the next step.

Start a Side Hustle

Have a skill or talent you can get other people to pay you for? Turn it into a side hustle!

• Are you the crafty type? Start an Etsy store to sell your creations.

• Have more time than money? Grocery shop or make deliveries for other people.

• Love animals? Try pet sitting and get paid to play with pups.

• Do you have a unique ability or knowledge to share? Try tutoring or giving lessons.

The opportunities for earning money on the side are really only limited by your imagination.

Sell Your Stuff

Take a look around you right now.

Do you see anything you don't need or have been meaning to get rid of?

Sell it!

From eBay and Facebook Marketplace to yard sales and flea markets, there's bound to be some way to turn your clutter into cash.

Use my room-by-room guide to find things around your house you can sell to help build up your Christmas savings funds.

Credit Card Rewards Balance

This has been my secret weapon for the past several years.

I strategically use my credit cards to maximize our cashback, but instead of cashing it in throughout the year for random things, I save it up to add to our Christmas fund.

I use the American Express Blue card for gas and groceries and the Citi Double Cash Back card for everything else.

Your savings will vary based on how much you spend. But if you "forget" about it until Christmas, it will definitely help you with your Christmas budgeting.

PRO TIP – If you've got high-interest debt, you should NOT be spending on your credit cards. The cashback savings strategy is only valid if you're not carrying a balance.

Lower Your Christmas Expenses

As Christmas time approaches, hopefully, you'll have a fully funded Christmas budget, but in case you don't or you'd just rather not spend it all, here are some tactics and gift ideas to lower your holiday expenses.

Try a Secret Santa Gift Exchange

Secret Santa gift exchanges are a great way to lower your gift costs. Instead of buying gifts for everyone, you draw names and just buy one Christmas gift for the person you selected.

Because you're only buying one gift, you tend to put more thought and effort into finding the perfect gift. That usually leads to more creative gifts and definitely more meaningful gifts.

Make Something Yourself

Another great way to give thoughtful gifts without spending hundreds of dollars is to give a handmade gift or homemade treats.

You can avoid credit card bills altogether if you're DIYing your Christmas presents. 

Use the 4-Gift Rule

If you have a habit of giving lots of gifts, the 4-gift rule is a great way to stretch your Christmas gift budget.

Under this "rule" you're limited to giving just four gifts in the following categories:

• Something they want

• Something they need

• Something to wear

• Something to read

The 4 gift rule will help you save your precious holiday dollars by shortening your shopping list and reducing the number of gifts you need to buy.

Use Discount Gift Cards

Using discount gift cards is one of my favorite ways to save money.

Use a site like Raise.com to make your Christmas shopping cheaper or look for discounted gift cards to use as gifts at your local grocery store or Costco.

Final Thoughts

Want to make this Christmas the best yet?

It's easy to get caught up in the holiday shopping rush and tell yourself you'll worry about the money later.

But with a little forward-thinking, you can easily make a Christmas budget, start saving, and give yourself the gift of a debt-free Christmas!