Budgeting for Christmas

Tis the season for new sales every day, which makes it a great season for budgeting! Not that there’s ever a bad season for budgeting, but the holidays are definitely one time of year that can run you right off the road if you don’t go into them with a plan. That being said, Christmas is one of our favorite holidays: we love all the gift-giving, delicious food, and fun cocktails, and seeing family. There may be other ways to budget for this, but this is what has worked for us.

Step One: Set the Christmas Budget

At the very beginning of the season, my husband and I look at our finance situation and decide what we’re going to spend on Christmas total. Anything we choose to spend is coming out of our savings or overpayment on the house, so we make sure that we are both on the same page about the Christmas budget AND the potential end-of-the-month situation.

Step Two: Decide on Christmas Budget Categories

Once we have decided on the larger amount that we’re willing to devote to Christmas, we break it down into smaller categories. We have categories for our family members, stocking stuffers, any other gift exchanges we’re participating in, extra food for parties and celebration dinners, and Christmas decor. Within those categories we have to decide what amounts will go where. We assign an amount to each person we’re buying gifts for, and every other spending category, and then the hard part is done.

Step Three: Track the Christmas Budget

Here’s where budgets are most likely to run off the rails. Most people don’t spend the whole budget at once. There might be multiple days that you’re Christmas shopping, or different times that you need to purchase food for events–keeping track of it all and knowing when to stop is where the trick of it lies. You need to decide on a system for keeping track of what you’ve spent.

If I’m trying to physically remember where I am in the budget when I’m shopping, I feel constantly distracted by it and frustrated. Checking the bank account and adding it all up every day can get really tedious too, so I have a simple note in my phone. Every time I make a Christmas related purchase, I write down the amount and what category it came out of. As purchases build up under different categories, I can know exactly where I am in just a few seconds. It’s simple, but it works.

We (Josh and I) keep each other updated if we make purchases out of a specific budget, and keep the communication lines open. Christmas is not the time to be LESS communicative about the budget! Yes, we want to enjoy ourselves and make good memories, but we don’t want to end the year by being stressed out over money we shouldn’t have spent.

Step Four: Detailing the Christmas Budget

I don’t know if you’ve learned this about me yet, but I’m a planner. I don’t go grocery shopping without a plan, I don’t go clothes shopping without a plan, and I definitely don’t go Christmas shopping without a plan. Shortly after the budget talks and before the big sales start happening, we usually have another sit-down and decide on the gift list. We get pretty specific, and make sure that it fits into the budget even at normal prices.

When we have the list, then we start watching the sales that pop up. We stick pretty close to that list too, keeping in mind that the goal is to get presents people love, not spend all the money. If you run across great sales and get everything on the list for 30% less than you expected to, you don’t need to immediately find something else to spend it on. We like to just sit tight a while and stick to the plan. Something will probably come up and the extra will come in handy, but if it doesn’t and we didn’t spend the whole amount in a budget category, we don’t feel the need to rush out and find some way to spend it.

Step Five: Enjoy it

You’ve planned it, now enjoy it. This is probably the hardest step for me. I am a natural saver, and it is hard for me to go ahead and get my mind out of saving mode even when it’s for Christmas fun and we’ve planned it thoroughly. But if you’ve done the planning and are keeping track of the spending, there’s really no reason to fret. It’ll be January soon, and we’ll be doubling back down on our saving–now is the time to enjoy shopping! I really do enjoy shopping the sales and trying to find the best deals for the items on my list!

So how do you budget for Christmas? Any tips? I love hearing about how other families live the budgeting life!