How to Budget for Christmas

Is it September already? That means only one thing – Christmas is around the corner. It is time to start buying gifts, time to dig deep into your finances. Time to look at your finances and your budget for Christmas.

Do you budget for Christmas?

How do you prepare for Christmas? I mean financially, of course. Let me know in the comments below. What is your Christmas budget like?

Holidays can be such a drain on the finances. I mean I love the festivity and the joy. However, it is so easy to get carried away and burn a hole in your pocket.

A simple way to budget for your holiday spending

The process is pretty easy. Start by making a list of all the people who you would be gifting to. Uncles, aunts, cousins, parents. Write down each person’s name. You can do this in a notebook, a spreadsheet or in a budgeting app or program – each one works just as well. Choose whatever you are comfortable with.

In budgeting terms – Gifts would be budgeting head and each person a sub-head under that.
Next, decide a price range you will be spending on each person. Total it up.

To this add amounts for other heads like charity, food, decor, stocking stuffers etc. All of these combined give you your budget for Christmas. There you go – easy peasy.

Funding your Christmas Budget

Wait, that is not all. Now you create a ‘Christmas Fund’ for this entire amount. Ideally, you should start doing this right from January each year. Say the total amount you plan to spend is $750. That would mean you start putting aside $62.5 aside each month starting January.

You could save it in cash or better still open a savings account specifically for this purpose to which you put in the required money.

But hello, what about this year? If you are like me and haven’t started putting aside funds this year, then now would be the second best time to do so. (January was the best time, of course).
You need to put aside $187.5 each month, starting this month. This may seem like a lot, but it is still better than having to come up with $750 in one month.

What is a Christmas Fund

A Christmas Fund is a savings account that you open for funding your Christmas Budget. You put in money into this account each month. This will ensure that you are not tempted to spend this money for other purposes.

This is where you actually deposit money each month and watch it grow. This is where you withdraw from when it is time to go gift shopping.

Your fund will whittle down to zero around Christmas. Just make sure to start stashing away those dollars once again in January.

How to have a reasonable budget for Christmas?

Are you a DIY person when it comes to gifting? After all, handmade gifts are priceless. And how do you even value the thought and effort which goes into them?

Or do you like splurging on your family and friends? You wanna shower them with the latest gadgets and toys.

Whatever type you maybe – you need to make sure your budget is reasonable and you will not overshoot it.

Wanna know if the amount you are budgeting for is something you can afford? This is what Dave Ramsey suggests might be reasonable for you.

Here are my top tips on how to avoid overspending and heartburn:

  1. Look at your previous years’ budgets.
    How much did you spend on each person last year, or the year before that? Are you willing to spend the same amounts or adjust them somewhat? Look at the list of people who you gave gifts to – does anyone need to be removed or added?
  2. Look at the overall amount and see if you can afford to spend it.
    Maybe you have a better income this year and can afford to bump it up or do you need to cut it down? Adjust individual amounts accordingly. If you decide you can afford to spend $100 more this year – do you want to increase the budget of 10 people by $10 each, or maybe $50 more for your husband and children?
  3. Have a few options.
    For each person on your list have more than one gift options. Write down the cost of each gift. Whether you buy one item or a few, these should not cost more than your initial budget
    Keep adjusting – In case you wanted to spend $80 for your aunt but got a great gift for her for less, add the balance amount to a budget head called ‘Adjustments’. You can use this amount for someone else’s gift. Remember to not overdraw on this budget head. In other words, you can use an amount from this only if there is some amount in it.
  4. Keep track of your spending and how much you have left to spend.
    As Christmas approaches and you start buying up gifts and decor, be sure to note down each purchase you make. Put down the amount you spend on each person against that person’s name at the end of each day. See what amount you have left balance.

Finally, remember that budgeting for Christmas does not have to be complicated. The simpler it is the easier it will be for you to stick to it. Also the earlier you start the process, the less of a burden it will be each month.

So go ahead, start planning your budget for Christmas. You can thank me later. 😀

Learn how to create a simple Christmas budget and actually save for it. Christmas budget planner to set up a holiday budget. Have a stress free Christmas. Tips for a debt free Christmas
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