Something happens as soon as the holiday season is over. We forget. We forget about how much money we spent, how we resorted to credit cards, how much we swore we’d plan better next year. If this sounds like you, then listen up…you have to create a Christmas budget sooner rather than later to cure yourself of holiday amnesia.
If you don’t, create a Christmas budget, you’ll keep repeating the same mistake over and over again!
With Christmas less than 90 days away, Santa will be heading for the sleigh soon to take flight. Now is the time to commit to a debt free Holiday!
Statistics show us that those of us who plan for the holidays have a better shot and ensuring they are debt free than those of us who just wing it.
Get ready; the time is now, and I’m going to show you how!
How To Create A Christmas Budget That Will Keep You Out of Debt
1. Make Your List
The first place to start is with your gift giving list. If you’re tight on money, this is the place you’ll more than likely have to make some cuts. Remember as you think about your list, only include the most important people on your gift giving list. Nothing and almost no one are worth getting into debt over.
Go ahead and make your list. Think about all the people you want to buy a gift for.
Your list might include the following:
- Family – aunts, uncles, children, spouse, cousins, siblings, grandparents, and even the cat. Include everyone you WANT to give a gift to.
- Co-workers – partners, bosses, co-workers, support staff
- Friends – neighbors, fellow volunteers, church friends
- Those who provide services – nail tech, hairdresser, paperboy, mail carrier, yard worker, pool cleaner, teachers
- Anyone else? Put them on the list.
Don’t forget to add all the other incidentals that you’ll need to pay for.
- Wrapping paper and bows
- Charitable contributions
This is just a starting list. Use my handy Holiday Reminder List to help you create your complete list of Christmas expenses.
2. Determine How Much You Can Afford
The calculation is simple: how much can you save, plus how much you’ve already saved (if you did) between now and Christmas.
Take a look at your finances and decide how much money you can realistically set aside for Christmas this year without relying on credit cards. If you have a Christmas fund already established, and you’ve been diligently putting money aside each month, then you pretty much already know what’s available to you for Christmas. If not, get out the calendar and start calculating, based on your monthly spending plan what’s open for Holiday shopping.
Don’t do this step after you’ve made your list of gifts to buy. You might end up very disappointed that you don’t have enough, which might lead you to want to use your credit cards. Instead, do this step first.
Know what you’re working with and then make the commitment to stick to this plan. Remember it’s easier to stick to your plan than to try to stretch it beyond its capacity.
Remember, your budget isn’t just for gifts. Don’t forget to include money you will need to spend on holiday parties, food, decorations, gift wrapping supplies, stocking stuffers and more. Use my Holiday Budget Worksheet.
3. Go Back to Step #1 and Make Some Cuts
When I started making changes to the way I managed and spent money, I had the most difficulty during the holidays cutting people off my Christmas list. I finally had to come to the realization that while it’s nice to give to my kid’s teachers, the mailman, and the paper boy, it’s not necessary.
So, what’s the point? If your budget can’t support buying for all the “extra” people – then trim your list and cut them out.
4. Make The Budget Work
Now that you know how much you have to spend and who you want to spend it on, it’s time to get a bit more detailed with your spending plan.
In my family, we don’t do a lot of gift giving. We’ve pared way down from the way in which things used to be. Instead, I give one gift to my daughter, usually something special. Last year I bought her a car starter for her car and the year before she wanted a Wii. This year she wants gift cards to Home Depot so she can start remodeling her bathroom.
I’m a big believer in getting people what they want, provided it fits into the budget. This way they get what they want, and you spend your money on something you know they will like. It’s also a very stress-free way of gift giving – and that’s our aim here.
The point here is to see what money you do have available, and then parcel it out according to a specific spending plan. Remember to identify the monies that will be needed for holiday food, wrapping supplies, stocking stuffers and the like.
5. Stick To The Budget
You’ve got the holidays mapped out. Maybe you don’t have as much money saved as you had hoped but you made a promise to have a debt-free holiday.
I know it might be hard to stick to this pledge, but believe me, in the end when you don’t have to worry about any additional credit card debt you’ll be happy knowing you did what you needed to do to have a debt free Christmas.