Christmas is 64 days away. If you’re paid semi-monthly, you’ve got four paychecks remaining to save up for gift giving. Christmas is a time of year when you can easily overspend. The best practice is to set a Christmas budget, spend smart, and avoid the penalty of paying for your frivolity next year.
Here are five essential steps to plan your Christmas budget with intention.
1. Calculate your Christmas budget
Base your budget on how much you have available to spend, not how much you want to spend. If you’re getting a large bonus in early December and plan to use that to fund your Christmas budget, perfect. Make sure you earmark that in your monthly budget, track your spending, and don’t exceed your allocated dollar amount. With more significant sums of money, it’s easy to fall prey to feeling comfortable; you’ve got plenty and overspend.
Your budget may be small, requiring you to be creative and give small gifts. These are my favorite gifts to receive. I’d much rather receive a thoughtful gift that cost little to nothing (such as a paper origami crane with a handwritten poem from my husband) rather than a $50 gift card to Target.
2. Identify who you’re giving presents to
Do you have a small family and exchange gifts with everyone? Perhaps you have a large family and do it Secret Santa style? Or maybe, like me, you only exchange gifts with local family.
Make a list of everyone you need to shop for: your boss, your colleagues, your best friend. Be realistic – you don’t have to shop for everyone, but try not to be Mr. Scrooge either. You also don’t have to reciprocate if your colleague buys you a pack of Star Wars paper clips because he saw them and thought of you. Accept the present with gratitude, but don’t feel the need to run out and buy him a gift if you weren’t planning on it. Because the best part of Christmas giving is the giving and watching another enjoy their gift.
3. Organize your Christmas budget
I stay organized in the free version of Trello. I have a board for Christmas with a list for gift ideas, and a card for each person. Other lists include a To-Do list, a Purchased list, a Done list, and a Budget list where I keep track of my spending. Trello stays on my phone, so I can check it when I’m out shopping, and also add to it anytime.
You don’t have to use Trello. You can use an excel spreadsheet, a paper notebook, or another program such as Evernote. Choose your preferred method and make sure you stay organized and track your spending. The easiest way to overspend is to relax and not pay attention. Sticking to a Christmas budget may feel limiting, but you’ll find yourself with more freedom by spending with intention.
4. Consider alternatives to presents
Christmas holds a different meaning to different people. For my family, it’s merely a holiday and an opportunity to love on each other. Gifts aren’t always the best way to express your love. Take some time to examine the meaning of Christmas for you and your family. Are presents the best way of reflecting on the purpose?
For example, I don’t like clutter in my house, and everything that comes in the door is just another thing to clean. So my family chooses experience over physical presents. Last year we went to Disney World for Christmas and exchanged very small gifts. Admittedly the kids struggle with not getting 100 presents under the tree from Santa, but I’m in the parenting game for the long run, and I know the value this approach to Christmas is teaching them, as well as the fantastic memories we’re creating.
5. For next year: set up a sinking fund and budget throughout the year
Take your Christmas budget for 2019, bump it up by 10% and divide by 12. Create a sinking fund and save for Christmas all year, which provides two massive benefits. 1) You can shop sales all year and get a bigger bang for your buck, and 2) you won’t be stuck with an unexpected credit card bill in January.
Have you been saving for the holiday season? Let us know in the comments below.
Read more:
Spend Less On Holiday Shopping By Avoiding Retail Traps
The Holidays are Coming and You Need Money
Don’t Make These Credit Card Mistakes This Holiday Season
Kate Fox is a former CPA, with twenty years of experience in public accounting and corporate finance. Born and raised in Alaska, Kate is currently based out of southeastern North Carolina. She loves coaching others on personal finance and spends her free time traveling with her family or relaxing by the pool with a good book, probably about money.