Christmas Budget Planning
DECEMBER 12th
🎉 Hey East Bay 🎉
Did you know Americans spent $886.7 billion on Christmas last year?1 That’s a lot of photo cards, personalized stockings, candy canes, Christmas music, Santa hats, and sparkly ornaments. But unless you plan on skipping Christmas this year, you’ll find yourself a part of that $886.7 billion machine too.
Good news: You can enjoy the gift-giving season without any guilt-ridden overspending. How? Set up your Christmas budget, save up a Christmas fund—and then stick to your plans.
How to Make a Budget:
You need a plan—and that’s what a budget is: a plan for your money. Now, to set up a Christmas budget, you also need to set up your monthly budget.
Here’s how to get started in three easy steps:
1. List your monthly income.
What counts as income? Any and all money your household brings in each month is income—including any side jobs you picked up for the holidays!
2. List your expenses.
Now it’s time to write down every expense you know is headed your way.
Giving (this should be 10% of your income)
Savings (depending on your Baby Step)
Your Four Walls (food, utilities, shelter and transportation)
Other essentials (insurance, debt, childcare, etc.)
Extras (entertainment, restaurants, etc.)
Once you’ve got the regular expenses in the budget, add a Christmas budget category! Under that, you’ll need budget lines for gifts, decor, and ingredients for all those delicious Christmas dishes you make every year.
You have to plan every dollar and make sure your income and expenses total zero. What if you do the math and get a negative number? This can totally happen during the holidays with all those extra expenses in the budget. A negative number here means you’re planning to spend more than you make. That. Won’t. Work. Just cut some spending or increase your income to make the number zero and balance it all out!
What if you end up with more than zero? Celebrate! You can put it to work in extras or into holiday gifts.
Creating a Plan:
1. Plan how much you’ll spend this year.
When you’re setting your spending limit, remember: The amount you should spend is based on what you make, what you’ve saved, and what you can move around in your budget to get the job done.
You’ve already set up your monthly budget, so you should have a good idea of how much you’ve got to play around with for Christmas this year. Set planned amounts for Christmas gifts, food, travel, decor, and anything else.
And whatever you decide to spend, be ready to stick to it. Commit to no debt, because no one needs Christmas payments sticking around past St. Patrick’s Day.
2. Add the Christmas budget to your expense list
Name it anything you want: Santa’s Stash, Festive Finances, Merry Money, or the super straightforward name we’ve given here—Christmas Spending.
3. Make budget lines for gifts, food, decor and all things holiday.
List everyone on your nice list and how much you plan to spend on each of them. This includes everyone from your kid to that coworker you got for Secret Santa this year.
Create a budget line for everyone you plan to give gifts to. At this point, every dollar you’ll spend is attached to someone’s name, just like categories in a normal budget.
Add lines for any other Christmas spending, like food and travel or more money to your grocery spending and transportation lines if you’d prefer. Whatever gets your budget ready for the extra expenses of the season!
4. Track your spending as you go.
Want to know how you don’t overspend? You track your expenses. Every. Single. One. That’s right: Keep up with all that spending as you go. Add each transaction to your budget list and keep yourself accountable.
5. Move amounts around when needed.
If you budgeted $25 on gifts for Aunt Jordan but hit a few sales and got everything you need for only $15, then take that extra $10 and put it to good use. You can buy Aunt Jordan another gift or add that amount to another budget line where you might need a little more wiggle room.
That’s the beauty of your Christmas budget—this thing’s not set in stone. You can change up the planned amounts after you put them in there. Just make sure you don’t overspend the total amount you planned for Christmas—or your budget as a whole!
Save Money THROUGHOUT the Year With a Christmas Fun
Consider starting a Christmas fund. Think of a Christmas fund as a savings account you set up for all your Christmas needs. This is where you’ll stash the money you’re saving for Christmas and watch it grow as the season gets closer.
If you’re reading this in November or December, you don’t have time to create a sinking fund . . . for this year. But keep reading, because you’ll want to start saving next summer so you aren’t scrambling to cover Christmas next year.
When you’re planning a Christmas fund goal for the year, take a look at how much you spent on Christmas gifts last year. Where did you overspend? Do you need to up your budget or lower it a smidge? Where can you cut back this year?
Answer those questions, then set up a Christmas fund!
How to Set Up a Christmas Fund
Here’s how you create a Christmas fund:
Set a total goal amount for your Christmas fund.
Divide that total by the number of months before Christmas. This is how much you need to save each month.
Create a sinking fund in your expense list to stash that amount back every month to reach your goal.
When you start saving every month for your fund by December, your Christmas savings will be fully funded, and you can savor the season instead of feeling pinched for extra money.
What Budget Lines Can You Tweak?
Little splurges here and there, tickets to concerts or movies, that habit of clicking “add to cart” after a targeted ad—look through your normal budget and figure out what you can trim down for a month (or two) to free up money for your Christmas budget.
What Christmas Traditions Can You Skip?
Psst, guess what? You don’t have to do elaborate pranks with your Elf on the Shelf this year. Or fancy Christmas card photo sessions. Or a Clark Griswold-style Christmas lights display. The kids will survive, we promise.
You can save money this year by cutting out traditions that you don’t truly have to do. Be open and honest about your budget as you try to figure out which traditions to cut and which to keep.
How Can You Cut Down on the Cost of Gifts?
Shop sales. Use coupons. Go for DIY homemade gifts instead of buying gifts at the store. Give out baked goods for gifts. Skip all the random gift exchanges. Instead of presents for every extended family member, just draw names and buy only one gift for the person you get.