If you make budgeting and spending decisions before the holiday madness sets in, you’ll be more likely to stick to your guns when the beautiful catalogs, store displays, and TV advertisements arrive. Here are my best tips for setting and sticking to a Christmas spending budget.
It’s still in the 90’s here in Houston, but even as I sit here in my flip-flops and shorts, I have myself convinced that fall is in the air. Bring on the chili, pumpkins, sweaters, and boots!
With fall on the brain, I don’t really feel like thinking about Christmas just yet. But since I want to stick to my plan to have a stress-free Christmas this year, I know that dedicating just a few minutes here and there to some Christmas planning will pay dividends in a few short months. It’s kind of like exercising — it can be tough to get motivated, but it feels so good after you’ve done it.
This month I am focusing on creating a holiday budget.
Year after year, I’ve found that our finances get out of whack in December. It’s just so easy to get swept up into the hustle and bustle, the sales, and the shiny, pretty things, and to let all of your financial willpower go sailing right through the chimney like Santa’s sleigh.
But overspending during the holidays is one of the biggest sources of stress; and conversely, feeling stressed during the holidays can lead to overspending (aka: retail therapy). To avoid these traps, let’s set and STICK to our budgets this year so that we can enjoy a stress-free holiday without wrecking our bank accounts.
Setting (and Sticking To) a Christmas Budget:
1) Anticipate NON-GIFT holiday expenses.
A lot of people just think about gifts when figuring out their holiday expenses, but there are SO many other extra costs that hit when December rolls around.
If you spend some time now making a list of anticipated expenses, hopefully you won’t encounter any surprises at Christmastime. Aside from gifts, here are a few of the most common holiday expenses you might have:
- Holiday cards (photography, printing, and stamps)
- Christmas tree
- Holiday decor (inside and outside)
- Tickets to special holiday shows or events
- Travel (plane tix, extra gas for road trips)
- Entertaining (extra food & drink costs)
- Holiday meal & baking supplies
- Special holiday clothing/outfits/shoes
- Special things for kids (advent calendar, etc.)
- Charity drives/giving
- School events/parties
- Dinners out/babysitters
Make your list and check it twice!
2) Allocate a realistic dollar amount for everything you plan to spend money on.
Note the word REALISTIC. I think the biggest issue people have when creating and sticking to a budget is that they tend to low-ball the amount they’ll need. It feels good at the time to write down that low number. But if you’re not being realistic about how much you’re actually going to spend, and accounting for all of your expenses up front, you’re just setting yourself up for stress and disappointment come December.
- Write out a list of each person/family you’re going to be buying a gift for. Don’t forget to include the little gifts! Gifts for teachers, instructors, bus drivers, co-workers, hostesses, etc. Those little $10 gifts might not seem like a bit deal right now, but those costs can quickly add up.
- Next to each name, write what you plan to spend on that person.
- Next, attach a ballpark dollar amount to each of the non-gift items you listed in Step 1.
- After your lists are made and your amounts are set, tally it up.
Are you surprised by the total? Is it more or less than what you anticipated?
If it’s less than you intended, then awesome — you are all set! But chances are, you’re a little overwhelmed by the total. If that’s the case, read on to find out how to make your ideal budget and your actual budget align.
3) Figure out which things you need to cut back on, omit completely, or get creative with.
If you find that your budget is spread too thin, think about what you can omit completely or cut corners on. Only you know what’s most important to you and your family. You might decide you’d rather put money toward a family outing to “The Nutcracker” than toward having professional photos taken for your card. Or maybe you’d rather buy new outdoor lights for your house than shell out for a spectacularly huge christmas tree this year. Perhaps you’d rather spend less on gifts so that you can host a fun little holiday party for some friends.
I’ll admit, it’s hard for me to completely cut out something I really want to do (even when my budget suggests I should), which is why I like the option of getting creative:
- Check out Groupon for great deals on photo cards.
- Instead of hosting a lavish party, get people together for a cookie exchange or a potluck.
- Check out Pinterest for DIY decor ideas and inexpensive homemade gift ideas.
My best DIY creations are usually born out of a desire to be frugal…and sometimes they end up better than the store-bought version anyway!
(This battery-powered LED wreath that I made from a basic Michaels wreath form that cost $4.99 ended up looking just as nice on my door as the $75 version I originally wanted).
4) Manage expectations.
I think most of us would agree that others’ expectations can be a big obstacle when it comes to controlling our Christmas spending. Nobody wants to be the Debbie Downer who bows out of the family gift exchange, or hands her grandson a homemade sock puppet when he’s been hoping and praying for a $50 truck.
But if you want to have a fun and stress-free Christmas where you’re not constantly worried about going over budget, you need to get others on board. Consider reaching out to family members to suggest a cap on the amount spent on gifts. Also, talk to your family to find out what everybody loves most about the holidays. You may learn that some of the priciest activities aren’t anyone’s favorite. Maybe everybody was just pretending to love the annual outing to The Nutcracker, but they’d really be much happier watching “Elf” on Netflix and eating homemade cookies!
If you feel your resolve waning, remember WHY you are setting a budget. Why is it that you need or want to save money this year? Focusing on the WHY will help you stay on track and avoid giving into those impulse purchases that are so tempting to make when you’re strolling through the shops with Christmas music blaring and feeling full of holiday spirit.
5) Take notes.
If this is your first time making a Christmas budget, chances are there will be some errors. Things will come up that you may have forgotten to plan for, or you might have gotten suckered into the giant mall package of Santa photos again. That’s OK! Creating and sticking to an accurate budget takes practice, and you’ll find that you get better and better at it year after year.
The best way to get better at budgeting is to write everything down. When the holidays are over, you can look back at what you really spent vs. what you planned to spend, and see what went well and what went wrong. Use what you learned to plan an even better budget for next year.
Do you deal with budgeting issues during the holidays? Share any tips you have for avoiding over-spending!
And if you’re looking for inexpensive ways to savor the holidays, check out my post on 10 SIMPLE HOLIDAY TRADITIONS that can be done anywhere, on any budget!