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How to Create (and Stick to) a Christmas Budget

Plan an epic Christmas on a budget this year so you don't regret the bank statement you'll receive weeks later.

Christmas is the most wonderful time of the year… until you take a look at your bank statement a few weeks later. It’s not uncommon to get so caught up in gift-giving, festive fun, and holiday events that you deal a striking blow to your finances, only realizing it after the checks have bounced and overdraft fees are withdrawn. 

There is a better way! Creating and sticking to a dedicated Christmas budget can make your holiday season significantly less stressful, and perhaps even more intentional at the same time.

Why create a budget? 

There are clear benefits to budgeting — it can help you achieve both short-term and long-term financial goals. In general, creating a budget gives you clear insight into how much money you have coming in every month, and what it is being spent on every month. More specifically, creating a detailed and honest budget helps you see precisely where you’re spending money, giving you the information you need to decide whether you need to spend less in certain areas. 

Budgeting helps you be intentional with your money. When you know there are limits on what you can spend, you get better at routinely asking yourself — before you make a purchase — if you really need to buy the item you’re about to buy. When you budget, you have healthy boundaries with your money — you buy with less impulse, and more intentionality. 

Why budget for Christmas, specifically? 

Budgeting is a way of taking control of your finances instead of letting your money worries and stress take control of you. Budgeting for Christmas, then, helps you approach a typically high-spending time of year with moderation, control, and focus. 

The holiday season typically results in extra expenses compared to other times of the year. Buying gifts, attending special holiday events, spending money on decorations, travel, and other fun activities send your expenditures for the months of November and December up dramatically. 

Budgeting for Christmas ensures you still enjoy the season with your family, give generously, and have fun without cringing when it comes time to look at your bank account or credit card statement on January 1. Nobody wants to spend the better part of the new year paying for the old one, and a budget is the best way to avoid having to do that. 

How to budget for Christmas

Allotting funds for Christmas will also help you be more intentional about how you spend your time and money. Setting limits and staying within those limits will result in fewer impulse buys for yourself and others, and you’ll more carefully consider the gifts you’re buying for others. You may even discover that the gifts that you produce as DIY projects are lower-cost, and increase the thought and creativity you share with your family and friends. In fact, because these gifts are so personal, they might be the ones your people love the most. 

Christmas is fast approaching, but it isn’t too late to plan for a fiscally responsible, less-stressful holiday! Here are a few tips on how to get started on your Christmas budget. 

  • Start a Christmas fund. 

Come up with two reasonable numbers: The first should be a limit on how much you’ll spend on gifts for everyone you need to buy for; the second should be how much you want to spend on activities, decorations, and other holiday events. Be reasonable and honest with yourself when you come up with these numbers. If you feel like you’ll have to go into debt or pull out a credit card to reach them, it is probably much too high. 

Start setting aside a certain amount of money each week leading up to the Christmas season that will help you reach your Christmas fund goals. Setting money aside a little at a time will help reduce the burden of holiday costs, and it will be encouraging to see the number grows each week. 

  • Make a list of everyone you plan to buy gifts for, and set limits on how much you’ll spend.

If you’re married, talk ahead of time with your spouse to come up with a limit on how much you’ll spend on each other. If you have children, determine what you want to spend on gifts for each of them. This isn’t to squelch the fun, but rather to set a boundary that is reasonable and attainable when it comes to holiday expenses. When you set a limit on how much to spend instead of buying whatever you see that sounds like a good idea at the time, it makes you more intentional about what gifts to buy for your loved ones. 

  • Get creative. 

When possible, consider giving gifts that are lower cost but require your own creativity and skills to create. Gifts you make yourself often have more meaning and are even more appreciated by loved ones. Come up with a craft or special project your kids can make for their grandparents, or that you could make for your own parents. This kind of gift is more memorable and cherished than most things you could order online or buy in a store.

  • Shop smart. 

If you do decide to skip the DIY-gifts and buy items for family and friends, shop smart. Find sales and use coupons when you can, and take advantage of sales that happen after Thanksgiving. Plan ahead and do a little research on where you’ll be able to find the best deals on more expensive items. 

Start planning now for an intentional, well-budgeted holiday season 

Budgeting gets a bad rap, but it’s a great way to take a lot of financial stress out of the holidays. Setting boundaries and spending intentionally with a Christmas budget will help you spend more time this Christmas enjoying the fun and meaning of the season, and less time nervously checking your account balance!

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