How to Budget for the Holidays

The holiday season is upon us! It’s a very exciting time of year, but it’s easy to get caught up in the excitement of the season and overspend. This doesn’t stop with gifts; there are other expenses like food, decorations, travel, fun adventures, charitable giving, cards, etc. All of this can lead to post-holiday blues come January if you aren’t prepared. That’s the last thing you want to feel after such a joyous season. So how can you avoid overspending this holiday season?

Creating a Holiday Budget

1.       Decide on a Spending Limit. First, you need to figure out how much you CAN spend and how much you WANT to spend. Ideally, this would be money that you have in your bank account already so that you avoid debt.

2.       List Holiday Expenses. Once you know how much you have to spend, you will need to figure out what expenses you will have this season. Write out a list of everything you need/want to buy.

a.       Gifts-List all the people you plan to give a gift to this year. (Spouse, Kids, Teachers, Family, Friends, Work, Stocking Stuffers)

b.      Wrapping Paper

c.       Cards and Postage

d.      Food

e.      Decorations

f.        Clothing

g.       Travel

h.      Holiday Activities

i.        Giving

j.        Other

3.       Set Your Priorities. You might be a little nervous after you see all your expenses this holiday, but don’t freak out just yet. Go through your list and number your list based on how important each expense is to you. Use a “1” as top priority. Then rewrite your list with your priorities in order. These top priorities should be the first items you fund.

So, if you decide that giving gifts is your first priority, but sending cards is a low priority that means you allot more money for gifts than cards and if necessary cut out sending cards.

4.       Divvy up the Money. It’s time to figure out how much money to put towards each priority. Examine your list and estimate how much you plan to spend on each item. Do this without your spending limit in mind right now.

Try to be realistic with your estimates. For example, if you have 20 people of your gift giving list, it’s not reasonable to set a budget of $100. You can try to review bills and receipts from last holiday season to help you come up with realistic numbers.

5.       Adjust the Numbers. Add up your estimated totals. The chances are that this total will not match the spending limit you set in Number 1. So you will need to adjust the amounts. You can do this by cutting out your low priority items or scaling back the spending in other areas. For instance, if you wanted to throw a neighborhood get together but you’re over budget, then maybe you could do a potluck neighborhood gathering and everyone pitch in with food and decorations.

If you’ve made cuts everywhere you can and numbers still aren’t working, try to think of some ways to make a little extra spending money by selling unwanted items in your home or giving up an indulgence (buying coffee, eating out, going to the movies, etc.)

6.       Keep Track of Everything. To make sure you are staying on budget, be sure to write down all of your expenses as they come in. Adjust when needed.

What is your top priority expense when it comes to budgeting for the holidays? Comment below to share.