How to Create a Christmas Budget
If you’re anything like me, you have a habit of overspending on holiday gifts. It’s both a terrible habit and wonderful habit. No matter which holiday you celebrate this coming season, you will be giving gifts. To want to give more and more is a marvelous thing, but it can be a curse when it eats its way into the rest of your finances. You may overspend on credit cards or eat into other categories. This causes you to have to rework your budget after all of the gifts have been purchased or worse, continue paying for those gifts well into the new year. No one wants to start the new year in debt because they over-gifted. That’s why it’s important to create a Christmas budget for gifts.
So many gifts to buy!
A few years ago I started intentionally planning for Christmas. In my family, we buy a lot of gifts. With my family and Andy’s combined, there are five grandparents (six prior to this year), four parents, three siblings, two cousins (everyone buys for all of the children and my cousin has two), one child, two draw names, and two cousin gifts. Before buying for each other, that’s 19 people in total that we need to purchase gifts for. And we usually buy each person more than one gift.
When you really add it up, it’s so easy to see how one can overspend. If you don’t budget and you spend $50 here, $100 there, you could easily spend over $1,000 on gifts for everyone. And for most people, that’s absolutely insane. I mean, it is for us! We don’t have that kind of money to be doling out on gifts. Not only that, but it’s completely unnecessary.
There are so many wonderful gifts to be given that won’t put you into debt. And the recipients will love them just as much, if not more. Sometimes, the less expensive gifts are better because they wind up being more thought out. The other way we overspend is by just overbuying. Each gift only costs $10, so we keep buying, not realizing we’ve spent over $100 in $10 items on just one person.
Make a list of all people you have to buy gifts for at the beginning of the year.
At the beginning of the year, or right after the holidays if you’re really feeling ambitious, make a list of everyone you need to buy Christmas gifts for. I like to use a Google Drive sheet so that I can update it from my phone or any computer. I can also share it with Andy so he can update it, too.
For situations where I don’t know who I’ll be buying a gift for yet (like our drawing names) I just put in something generic like “Draw 1” and “Draw 2.” Once we draw names in September, I update it with names. I’ve used generic terms in this example. You would want to actually put in names so that you don’t get mixed up!
Determine how much you want to spend on each person
The first step is to figure out how much you desire to spend on each person. In our family, we choose an amount for our parents and then spend a percentage of that amount on everyone else. Those closest to us (genetically, not emotionally) get larger percentages and those more distant get smaller percentages. You’ll want to discuss with your spouse how much you can afford and want to spend on each person.
Let’s say the amount we choose to spend on our parents is $100 each. It’s a nice even, round number to figure percentages off of. From there, we might do 50% for our siblings which would be $50 each. Grandparents and various kid relatives would be 25%, $25 in this case. Since we only have one child, we don’t have to worry about setting up an elaborate budget for the kids. We would spend the same on him as on our parents. However, if we had more than one child, we would pick an amount to spend on all of the kids combined, and then divide it by the number of kids to determine how much to spend on each one.
There are certain groups that have predetermined amounts. For example, our two draw names have an amount that the whole family decides on together. The same goes for the small gifts that the adult cousins exchange.
Once the amounts are decided on, insert those into a column titled “Budget.” You’ll notice on my chart, the costs are listed at the end. I prefer to do it that way since those columns end up having one additional row, and I just like the way that looks at the end of the chart rather than in the middle. We’ll add these other columns in shortly.
Build the total amount into your budget.
Once we have out total amount, which in the above example is $725, we determine how much we need to save from each check. We’re paid bi-weekly, so that’s 26 paychecks per year to budget money from, but we only count 24 since the last checks usually come right before and after Christmas. If we do this before the beginning of the year, or within the first week, we can use all 24 of those weeks. Divide the $725 by 24 and that comes out to $30.20 that I need to set aside into the “Gift Fund” we have set up in order to have enough money by Christmas to cover all Christmas gifts.
You can do this in other ways. Once you know how much you need, you can determine how much to set aside every month and set aside money monthly. Or you can set aside money bi-monthly. You’ll have to figure out the best timing based on your bills and needs.
Collect ideas throughout the year.
As I shop and see things throughout the year that I think someone might like, I make note of them in an “Ideas” column. Some of these ideas are more expensive than my budgeted amount and by writing them down, I can periodically check to see if they go on sale. Sometimes they’ll then be priced low enough to fit within my budget. Other ideas will be lower and I need to accumulate ideas in case I don’t find one particular idea that fills the budget. Then I can later go back and buy several of those smaller ideas; it allows me to compile them all in one place and keeps me from forgetting them!
Mark down items as they’re purchased.
When I buy a gift for someone, I make note of it in the “Actual” column. I also make note of the cost in the “Actual Cost” column. As it gets filled in, the total is added up so that I can keep tabs on how close I am to my budget. Here and there, I go over a few dollars or under a few dollars. As long as when the table is completely filled in I am at or below my budget, it’s a win! I know I’ll have set aside enough money to cover everything and since I started account for it at the beginning of the year, I can start buying as early as I need to and will have money available in our Gift Fund.
If you haven’t started any budgeting for the holidays, it’s not too late to start.
Granted, you’ll have to save a lot more in a lot shorter amount of time, but you can still make your list and predetermine amounts for everyone on it. If you get started now, you’ve still got 10 weeks before Christmas to set money aside and make sure you don’t over spend! If you’ve already begun buying gifts, fill in those categories first and see how much you have left to work with. You might need to reduce the amount you spend this year with the short time frame left, but you’ll be sure to end the season on a good note and not in debt!
Do you budget for the holidays? What kind of planning have you tried? Did it work? Let me know!
-To your Better Life-
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