If you are looking for an easy way to set up a holiday budget, you have come to the right place! If you follow these steps, you will be able to spend less time worrying about your wallet and spend more time actually enjoying the holidays!
I love this time of the year, I really do. There are so many things to be grateful for: family, friends, good food and so many others. But heck, let’s face it, when it comes to finances, there isn’t much else that causes stress like finances do. It seems like every direction you turn, your money is flying out the door.
Living on a budget is important no matter what time of the year it is; however, living on a budget during the holiday season is even more important. Whether it is gift buying or traveling to visit family that is farther away, you can find that your spending gets, well…a little out of control. Even I tend to go a little over on my budget, especially when it comes to spoiling my wife.
That is why I want to help get your budget ready for this holiday season. Now, I realize that I may be a little late getting this out for Christmas 2016, but hopefully it will help you realize where you may have already overspent so you can re-adjust your budget. And I also know you may not want to even discuss budgets, but I promise that it will bring you more peace in the overall scheme of things.
Make a List
The first step to take is to write down everything you need to buy. If you don’t know what you need to budget for, you will quickly find that your finances are in a tailspin that you can’t pull out of. Start by getting out a pen and paper, or if you are like me pull up Excel and start making your list of everything you will need to spend money on. I like using a budgeting worksheet that I created.
Here are some examples if you need some help:
- Gifts for you
- Gifts for your spouse
- Gifts for your kids
- Gifts for your parents
- Gifts for siblings
- Gifts for teachers and neighbors
- Christmas Tree
- Travel Expenses
- Christmas Cards
- Holiday Meals
I tend to write down way more than I need to, and then find myself crossing off items from my list later on. It is more like a brainstorming activity from the days of high school classes. Once you get them all written down, then you can begin to organize your thoughts. It is more important to get all of the items/expenses down on paper so you can better understand what needs to be covered and what you can eliminate.
Price Out Your Items
Now that you have your list put together, start pricing out what your items are going to cost. This is why Excel is so great! I just put a new column in next to the person getting the gift and put in the estimated cost of the item. I typically go a bit further and start browsing online to see how much each item will cost. Then at the bottom, you can tally up the amounts and see what the expenses are shaping up to look like.
Now that you have seen what the estimated or actual costs are going to be, you may have a little sticker shock, which is a good thing. When you just go out and purchase the gifts, you don’t think of the amount you are spending as much as when you are seeing it on paper. Now you can start to figure out what items are on your list that are most important to you and what can be cut loose.
For example, is it important to you to spend $50-$75 on Christmas cards to send out to everyone? Or could you get away with sending a Christmas card to only your family and sending everyone else a digital version of your Christmas card? If sending out the physical card is important to you, then you will need to make up for it elsewhere.
If funds are really tight this year, you may consider getting one present for each kid and your spouse. You could also use the want, need, wear and read philosophy. Depending on the age of your family, getting them one or two main presents and a few smaller presents can go a long way and they may never know the difference. Just remember that it is the time with the family that is the most important and what makes memories.
Track Your Expenses
Now that you have written down, priced out your items and set up the priorities, it is time to get to work. As you begin to purchase your gifts or spend money on a holiday expense YOU MUST TRACK YOUR EXPENSES. If you don’t track your expenses, then all of the work is for naught. Keep all of your receipts and track it on your spreadsheet or in a budgeting software.
If you need help, find someone that hold you accountable. Sometimes tracking what you spend can be tricky and your accountability partner can help you stay on track and be honest about your budget. And remember, if you spent less than you anticipated, give yourself a quick pat on the back and either allocate it towards one of your other items or put that money back into your budget (preferably towards savings).
I believe this is really an important step, and one that you can already get started on for next year. My wife adds a certain amount every month to our Christmas Funds Savings account. You can save up a considerable amount of money for the holidays if you are planning ahead.
For example, if you are saving $50 a month, by the time the Christmas holidays come around, you should have at least $600. If you have planned ahead and looked at all of your holiday expenses, you may find that $600 is not going to be enough and you may need to either earn some additional money to make ends meet, or find somewhere in your budget you can cut out.
Don’t Feel Pressured
Whatever you do, don’t succumb to the pressure of needing to get everything on your list or to spoil everyone on your list. According to SunTrust Banks, Inc., 43% of Americans feel pressured to overspend during the holidays. You can enjoy the holidays without overspending, invest in people versus belongings.
Getting your budget created is an important step in planning out your holidays. It can be applied throughout the year for birthdays and anniversaries. Be mindful of your expenses and spending habits, and you will feel more in control of your finances.