Doesn’t it seem like Christmas comes faster and faster each year? If you’re like me, the holidays come with a bit of money-stress. There are so many things we feel we need to spend money on around Christmas-time, that it’s easy to get overwhelmed. But what if it didn’t have to be that way? Today I want to show you how to plan a holiday budget you can actually stick with.
Why you should plan a holiday budget
Most of us can’t afford to just spend money willy-nilly (even though some still do—eek!). But when it comes to shopping for the holidays, many people adopt the do-now-fix-later mentality. And guess what? Those credit card bills are still gonna come in January, and when they do, you’re in for a huge dose of reality.
So how can you avoid that major bummer of overspending for the holidays? Plan a holiday budget! I know, it sounds like fun, right? But even though it’s not anybody’s idea of a good time, it has to be done for the following reasons:
1. So you don’t overspend/go into debt
This is the most obvious reason to plan a holiday budget. It’s super easy to get swipe-happy and then have a mini-panic attack when you check your account. Creating a budget helps you be more aware of how much things cost and how much you’re spending. It helps avoid overdraft fees and those super embarrassing moments when your card is declined at the register.
I know we live in a credit card culture, but I hate (hate!) them so much because they give you a false sense of reality. “Oh, just put it on the card; we’ll deal with it later.” No! Most credit card companies charge insane interest rates, and even though you got a great deal on those boots, you’re actually probably going to pay more for them in the long run if you use a credit card.
The one exception to using a credit card is if you have the money in your bank account to pay it off at the end of the month. The. Only. Exception. I’m just helpin’ you out, trust me.
2. So you stay organized
The next reason to plan a holiday budget is to stay organized. Taking the time to plan out your spending goes a long way in keeping you on top of the holiday craziness. You’ll find that when you write everything down, there’s less chance of forgetting something. You know those last-minute trips to store because you forgot to buy a gift for your hubby’s boss? Those days fewer and further between when you plan a holiday budget.
3. So you are less stressed
I’m one of those people who are prone to getting sick when super stressed. So I plan a holiday budget to avoid missing out on the fun of the season because I’m sick in bed. Because I save money and am more organized during the holidays, I’m significantly less stressed and can actually enjoy the time with my family.
Things you should budget for
Now that you’re committed to planning a holiday budget, you may be wondering what exactly you should budget for. Here’s a quick list to get you started.
Gifts
This one is pretty obvious. The key is to write down the name of every person you need/want to buy a gift for. Then, decide how much to spend on each gift (we’ll talk more about this in a minute). And don’t forget to factor in shipping costs if you plan to send packages out of town.
Holiday parties
Whether you’re hosting or just attending, you must budget for those holiday parties. It’s polite to bring a host/hostess gift to a party you attend, so that needs to go on the list. And what about those parties that have a white elephant, potluck, or ornament exchange component? Those can add up real quick, so be sure to budget for them.
If you’re hosting a holiday party, you need to think about how much food, drinks, dinnerware, decorations (if your house isn’t already decorated for Christmas), and games will cost. Don’t leave anything out! To help, go through the events of the party in your mind, and write down every item you’ll need as you come to it. Trust me, it works!
Christmas cards/stamps
Christmas cards are hit-or-miss with me. Some years I get around to them; some years I totally space it. But remember that those cards and stamps cost money, so be sure to add them to your budget.
Meals
I don’t know how your family does the holidays, but most of what my family does revolves around food. Christmas Eve, Christmas Day, New Years’ Eve, New Years’ Day: they all include a meal (or two). We generally do potluck-style so no one family has to worry about providing everything.
For our little family (hubby, myself, and Little Man), I always prepare a special breakfast for Christmas morning. It’s a much bigger meal than we have for a normal breakfast, so naturally groceries cost more. Onto the budget it goes! And if you’re feeling really ambitious, learn how to meal plan and get even more ahead of the game.
Charitable giving
There are so many people around the world (and even in your own town) who are less fortunate than you are. We partner with several organizations like Operation Christmas Child and local toy drives to provide Christmas gifts for children who likely won’t receive one otherwise. By budgeting for it, we are able to help more than if we just gave what was left over.
Extras
As you plan a holiday budget, remember that there are always going to be those little things you forgot to budget for: those Christmas lights that blew a fuse, the last-minute party invite, or that one gift you forgot to add to the list. Budget a little money for extras so you’re not caught unprepared.
How to plan a holiday budget
Now that you know why you need to plan a holiday budget, I want to show you how to plan one you’ll actually stick with. There are five easy, but important, steps you need to take to do this right.
First, discuss it with your spouse.
It’s very important that you and your partner are on the same page. Like most things in a marriage, budgeting doesn’t work if just one of you is on board. If he’s reluctant, show him the info above (the why), and rationally explain why this is important to you.
As a team, look at your current household budget, and decide how much money you want to budget for the holidays. It may take some negotiating and compromise, but I promise you’ll be much better off if you’re both aware of the money situation.
Second, break it down into manageable pieces.
This is a team activity, so make sure you and your hubby are still in it together. Go through each of the expense areas we discussed above:
Gifts
Make a master list of all the people you want to buy gifts for. Then, look at the total amount of money you can afford to spend on gifts. Next, decide how much to spend on each person. For example: $50 on each other, $35 per child, $20 per each extended family member (grandparents, cousins, etc.), $15 per friend/coworker, and so on. These amounts obviously vary based on your total budget amount.
Holiday parties
Take a look at your calendar and figure out how many parties you have lined up. Write them all down on one piece of paper, and write what you’re responsible for at each one. For example: say you have an ugly sweater party, a white elephant, and an ornament exchange. Your list would look like this:
- Ugly Sweater Party: ugly sweater for me and hubby, appetizer, hostess gift
- White Elephant Party: white elephant gift ($20 max per invitation), cookies
- Ornament Exchange Party: one ornament each for me, hubby, and kids
Then, you can figure out how much to budget for each party. Of course, the list will be different (and much longer!) if you’re hosting.
Christmas cards/stamps
I always say I’m going to buy my cards on super sale after Christmas is over, but I never do. So every year I end up needing to budget for another box (or two). Make your Christmas card list before you buy them so you know how many to get. Same goes for stamps. It’s getting more and more expensive to send mail, so keep postage in mind as you budget.
Meals
Make a list (do you see the trend here?) of what plan to serve for all the special holiday meals. As you plan your holiday budget, keep those meals (and the number of people they will feed) in mind.
Charitable giving and extras
We already covered these topics, but make sure to add them to your holiday budget right away so you’re prepared when those expenses come up.
Third, save money in advance!
It’s never too early (or too late, really) to start saving for the holidays. Even if it’s a month before Christmas, you can still set some money aside from the remaining paychecks for your budget. We follow the 52-Week Money Saving Challenge from Morning Motivated Mom. Basically, you set aside a little money each week, and at the end of the year, you have over $1,000. We use some of that money to plan our holiday budget, and it’s worked great for us.
As I stated before, avoid putting items on credit if at all possible. I told you before that the only exception is if you can pay it off at the end of the month, but I thought of another one. Some credit card companies offer x months same-as-cash. It’s fine to take advantage of these promotions, but be absolutely sure you can pay off the balance before the time’s up. If you don’t, you have to pay all the interest you would have accrued. Trust me, I know because we made that mistake once. Never again.
Fourth, use the cash envelope system.
If you know yourself and have a feeling you might have a hard time sticking to your holiday budget, try the cash envelope system. Make an envelope for each budget category and add the corresponding amount of cash. Add a copy of your budget for that category, so you can check off the things you’ve already bought and don’t forget anything.
This will help you stick to your holiday budget. It’s so easy to swipe a debit or credit card, and those purchases add up fast. There’s something about physically counting money that makes us more careful about spending it. Just don’t make the mistake of borrowing from one envelope to supplement another (unless you have a surplus)!
Finally, stick to it!
This is the hardest part. All the planning in the world does absolutely no good if you don’t stick with it. To help, make a promise between you and your spouse to stand firm on your finances. Keep each other accountable by discussing it often, sharing receipts, and being honest with each other. There will be slip-ups, especially if you’ve never had to plan a holiday budget before. And that’s okay! Just make sure you get back to it and resolve to do better (and actually do it).
Don’t worry, mama! You don’t have to stress about money this holiday season. Take some time to plan a holiday budget, and you’ll be surprised at how much better you feel. Not only will you use your money wisely, you’ll also appreciate what you have so much more. So get your hubby on board, take some time to get organized, and most importantly, stick with it. I know you can do it!
Do you have a holiday budget system that works? Tell us about it in the comments!
