Christmas Budget Planning: Too soon? Think again

christmas budget

Christmas is coming faster than congress can agree on something, which is why it’s never to early to start putting together your Christmas budget.  Planning now will save you time, stress and money as opposed to getting caught up in the last minute dash to buy all of the gifts you need.  If you have ever had a Christmas spending hangover come new years, then spending ten to fifteen minutes to make an early Christmas budget is for you.

Christmas Budget Step #1: Write down all of the things you spend money on in the holiday season

While the focus of this article is on budgeting and planning for gift giving, you can’t forget that Christmas has a lot of additional costs that can catch you off guard if your not prepared.  Take a few minutes to think about all of the expenses you typically have at Christmas, such as the cost of food, travel, decorations, drinks, gifts, cards, etc.  Next assign estimated dollar values to each of those expenses to figure out what you typically spend on Christmas.  Add all of the dollar values up and then decide if you need to make adjustments this year depending on how much you want to spend all-in on Christmas.

Christmas Budget Step #2: decide how much you want to spend on Christmas presents

Depending on how extravagant the gifts are that you usually like to give and how many people are on your list, this number will vary greatly from person to person.  Luckily, the amount you spend on gifts is very much up to you and could be anywhere from $50 to thousands of dollars.  First look at how much you were able to save during the year and then use a reasonable portion of that for the gift giving portion of your Christmas budget.  If you were not able to save much, think of ways you could cut back to help make room in your life budget for your Christmas budget.  Remember that there are many options to consider when giving Christmas gifts, many of which are very meaningful while being inexpensive.  Put some thought into this and pick a number that you feel good about but that isn’t going to ruin your financial year.

Christmas Budget Step #3: think about how much you can/should afford to spend on Christmas presents

It’s now time to be completely realistic with yourself.  If you were not able to contribute to savings this year, or you have built up consumer debt, it would behoove you to spend very little on Christmas so you can keep your finances in order (remember that Christmas hangover I was talking about?).  Consider hand made gifts such as artwork, a photo album etc. instead of expensive store bought items.  Thoughtful gifts go a very long way so don’t underestimate the power of your own creativity.  If you have a significant other, have the Christmas budget conversation together so you can both be on the same page when it comes to spending on each other.

If you were able to meet your savings goals and you are free of consumer debt, you have more flexibility when making your Christmas budget.  Despite that, I urge you to consider the tradeoffs between spending a lot of money on Christmas gifts versus putting money away into a safety net or into a retirement account.  Remember you can still give meaningful and thoughtful gifts without spending an arm and a leg!

Christmas Budget Step #4: make a list of the people you want to buy Christmas presents for

This is your chance to think of all the people you want to buy gifts for so you don’t forget anyone as Christmas approaches.  Make this a checklist so you can check people off as you buy them gifts.  This way you can keep a running tally of all of the gifts you have purchased and the people you still need to get something for.  This will save you the stress of having to think about who you need to buy gifts for and what gifts are to go to who.

Christmas Budget Step #5: keeping in mind the total amount you can spend, assign a dollar amount to each person on your list

Assign each person on your list a dollar amount that you want to spend, keeping in mind that the total dollar amount cannot exceed the amount you set in step #3.  This will help you keep things in perspective as you are coming up with gift ideas for each person and when you’re shopping.

Christmas Budget Step #6: brainstorm a few gift ideas for people on your list that fit within the price range

Even if you prepare a Christmas budget, going shopping with only a vague clue of what you want to buy is a recipe for disaster.  Instead of letting store displays and layouts shop for you, make sure you go to the mall or shop online with a list of potential purchases.  Having a few gift ideas/options for the people on your list will help you shop for the best prices and spend less time and stress trying to find gifts in the heat of the moment.

Christmas Budget Step #7: keep an eye out for sales and special deals on the items on your list

The sooner you start shopping, the more time you will have to price compare and find good deals.  Having a Christmas budget prepared in a notebook sitting on a dusty shelf at home is great, but if you don’t execute on it early enough you may still find the stress of Christmas shopping creeping up on you.  Starting early and having your Christmas budget ready will allow you to find black Friday deals as well as keep a look out for special offers from department and online stores.

Christmas Budget Step #8: avoid that Christmas spending hang over

Wouldn’t it be nice to wake up the weekend before Christmas and think: “I can relax and do whatever I want because I already finished my Christmas shopping and I didn’t overspend”?  If you get your Christmas shopping done early and spread it out over time you will be less stressed out and more able to focus on what is really important during the Holiday season.  Also, having a master plan for your Christmas spending will ensure you don’t spend more money than you intended to.  Good luck on your Christmas budget!

If the thought of doing a Christmas budget gets you really fired up about budgeting, check out “Budgeting and Saving” and “Why You Need to Start Tracking Your Expenses”.

“Christmas Budget Planning” appeared in the FinancialNerd.com Personal Finance Blog carnival where you can check out other personal finance blogs.

Comments

  1. R S says:

    I like the idea of beginning to plan early for Christmas.

    One thing that came across my mind today was to remind people to be sure they are utilizing those rewards credit cards during this time of year!

    Lots of rewards cards will give additional bonus cash back or points if you shop through that cards “marketplace”. You can purchase the gifts you were already planning on buying for the same price and sometimes get up to 25% back in rewards. Ex. Chase Freedom Card has a marketplace website where you can earn extra rewards at select retailers, on top of the normal rewards.

    Another thing to think about is redeeming points/cash for gift cards to then use as gifts for people on your list. This might not only be through credit cards but also other loyalty programs you may be a part of.

    Remember to maximize your savings while sticking to your budget!

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  1. […] Pohl @ Finance with Reason writes Christmas Budget Planning: Too Soon? Think Again – Avoid that Holiday financial hangover this year by starting your Christmas budget early. […]

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