Budgeting for Christmas Now

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Christmas of 2007 seemed bleak in some ways. That was the year we woke up and smelled the debt. About six months prior to the holiday season, we gave up using our credit cards and headed to uncharted territory. We started using cash to pay for everything. We got crazy that summer and aggressively started attacking our debt. Every penny was accounted for.

By the time Christmas rolled around, we had made some progress on our debt. But, despite extra monies that came in that December, we didn’t feel right about spending money on things we probably didn’t need with money that really belonged to someone else. Of course, I kicked myself for not having planned better. And though difficult, it was a good feeling to keep costs low.

We bought a $10 table top Christmas tree, I made our presents for the kids, and the grandparents outdid themselves making sure there was more than enough under the tree to make any kid smile.

Fast forward a few months to Christmas time 2009. I found shopping to be a very painful experience. Unlike past years, we actually had money to spend. We were debt-free and even saving a little money every month. But because we hadn’t earmarked it as “Christmas money,” it felt like I was stealing from savings to pay for Christmas.

A wise friend suggested that I start a Christmas savings fund. Ah, yes, give every dollar a name — even the dollars you’re saving.

Spending struggles?

I’m sure each of us has different burdens to bear when it comes to Christmas spending. Maybe times are tough, and you are barely making ends meet during a regular month – forget about having extra at the holidays. Perhaps you compare the abundance your family enjoys with the want in others’ lives and have a hard time buying more. Or maybe you have no qualms whatsoever about spending, spending, spending, regardless of whose money it is — until the January bills start rolling in.

See? We all struggle in some way.

Let’s make this year different.

This year, let’s be purposeful in our Christmas spending. Let’ s not deal with guilt, panic, and a January bill.

But, how? The year is half over already. It’s already too late.

Too late? You’re still gonna spend money at the holidays, aren’t you? Well, plan for it today. Save for it. Budget for it.

Think through all your holiday expenses and allot for them, as this article illustrates,

When you’re doing your normal written budget—the one you do every month before the month begins—remember there are added expenses during the holidays. If you’re taking your famous green bean casserole to 15 Christmas potlucks, you’ll have a larger grocery bill; add to the budget. If for the past 10 years you have fallen off the ladder hanging lights on your house, budget for the emergency room visit. Sit down and think for a minute about the expenses you normally have during the season and plan for every one of them.

Usually our December celebrations follow a certain pattern. We can look back and see what we did, where we went, what we spent and then plan for it next time by setting aside a portion of that money now. I created this Holiday Budget Worksheet to help you and me plan for the holidays.

(True confessions, I didn’t start my Christmas savings fund until this month. But better now than not at all.)

As you do the math problem at the end of the Holiday Budget Worksheet, you’ll see the amount of money you’ll need to save in August, September, October and November in order to have the December you dream of.

FishBoy6 back in 2007 – just as happy as could be

Adjust Your Budget

If that number is too big to squeeze out of your current monthly earnings, then you get to make some choices — now instead of December 24th.

  • Find areas where you can cut costs. Chances are you do things that aren’t essential at the holidays. You may like them, but they may not be absolutely necessary. For instance, you don’t have to send Christmas cards every year. {gasp} I stopped doing that about three years ago (say 2007?) and no one complained. I save precious time as well as about $100 every year by not sending them.
  • Find ways to earn more money. Have a garage sale, look for a part time job, sell some stuff on Ebay. Despite a “down” economy, there are still ways to make a little pocket change.
  • Adjust your expectations. My kids were just as happy in 2007 as they were in 2009. In fact, they may have been happier. 2007 was a lean year in many ways for our family, and it bred thankfulness in our hearts for the truly important things. We focused on experiences more than expenses. And I think we’re the better for it.
  • Remember the WHY. Jesus doesn’t measure you by the decorations on your tree or the feast on your table. So why should you?

How do you handle holiday expenses?

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  1. I love Christmas and I love garage sales! So naturally I shop for Christmas during the summer months at garage sales!!! I find that people sell a lot of great items for my children that are new, almost new, or too cool to care that they are used. Just last week at a garage sale at the home of a preteen, I found unused crafts kits for my 5 and 7 yr old girls for their stockings!! My son 3 yr old will be receiving some gently used Spider Man toys. Games are also a great thing to buy if they are in good condition (just check for all the pieces). I found a WII game for the girls and Hulaballo for my son for $5 each. I put it all in a box in the basement but make sure I write down what I have purchased in my organizational notebook! This is when I start writing their Christmas list with checks next to the stuff I found at summer sales!!

    Decorations are a fun thing to shop for at Garage sales too!!! I got a gorgeous 6′ white Christmas tree for $6!

  2. People call me crazy, but for years I have done most of my shopping starting in July or August. I ask for lists early, or I buy some things I know somebody likes when I see it go on sale. I also buy other things even earlier in the year if it’s something I know is a great price that will get used. It’s easier for me to spend an extra $20-30 a month than to put that into savings, but the same thing is accomplished!

  3. We lived a whole year with my husband being laid off. His income was cut in half but we survived because we already had a budget in place. Christmas that year was VERY hard because we didn’t have “extra” money but we decided that we were going to make our gifts, right down to the wrapping paper and it was one of the best Christmases ever! Which proved to us that Christmas doesn’t have to be expensive. Plus it really put what Christmas was all about in perspective!

  4. Our bank offers a Christmas Club and I also work for the bank so out of every check I have money direct deposited to my regular checking account and to my Christmas Club. It’s easy, I don’t even miss the money and when October rolls around – the bank cuts a check (or does a direct deposit) for everyone who has money in their account. It earns a bit of interest too.

    For those who don’t work at the bank, we can set up an auto transfer for the customer that moves money from one account to the other whenever they want…

    My biggest dislike about this is that I don’t get that money until October and like Amanda Y above – I like to start early!

  5. I started using a Christmas fund last year (although it is really my all-purpose slush fund for birthday’s, too). My question, though is around equality for my kids in gift-giving. I’m interested in knowing the various ways around being fair. I have a 2yr old boy and 4yr old girl. Her wish list has more expensive gifts (electronics, Barbies, etc) while my little boy’s is very inexpensive and easy (balls, trucks, cars, puzzles, etc). My daughter noticed last Christmas that my son got “more” but we were sure to keep gifts monetarily fair. I realize this is a subjective question and different for everyone but I appreciate any input and/or advice given.

    Thanks a bunch!

    1. For those who are aware of money (our four boys), we stick to a money limit and try to buy some of the things that they’ve asked for. We spend less on the girls because they don’t really ask for anything yet. I just try to give them things I know they will like.

  6. I totally agree about saving up ahead of time. We start funding our Christmas account in January, actually! We put $40 a month into an ING account all year long, so we have a nice little pile of money come time to shop.

    And FishMama, I’m TOTALLY the same way about not wanting to spend money if it’s not earmarked for a particular purpose…I do much better with Christmas spending when I have money set aside specifically for that.

  7. We don’t go over board on gifts. Period. Our kids get tons of stuff from gradma and grandpa. My husband and I buy each of our kids ONE gift. As for extended familes….we draw names and set a reasonalble price limit. We try very hard to teach our kids the REAL meaning of Chirstmas.

  8. Since we started tackling out debt we have seriously cut back on Christmas spending and gifts–and for the last 2 years have cash flowed Christmas. It definitely makes for a more joyful holiday!

  9. Through my credit union I set up multiple automatic transfers to different checking accounts. One of which is my Christmas account. I got tired of carrying around sooo much cash when I was using the true envelope system, so I converted my envelopes to debit cards!

    There is no extra cost for all my checking accounts, and I don’t worry about stealing from one envelope any more. I have a check book app on my phone, so when I hand over my debit card (for any account) I immediately get out my phone and just put the amount in right at the check-stand. So far it is working great!

    I also do a lot of online shopping and so then I don’t have to worry about transferring funds or depositing my cash, I just use the appropriate debit card.

    That what works for me:)

  10. You reminded me to log in and see my ING Christmas account balance – woohoo! 🙂 This is the first year I have actually done this. I started in January, set up an automatic transfer, and then haven’t thought about it much since. Out of sight, out of mind! Automation works so much better for me. One of your tips that I really like is making a list now of things you want to do at Christmas. It’s such a great idea to think now about the important things you want to do before the business of the season starts.

  11. When I suddenly quit working, I had to explain to our son that his future Christmases and birthdays were not going to be quite so extravagant. He has actually enjoyed them much more (and has said so over and over) because he is careful to decide what he REALLYwants rather than just like everything he sees and then get tired of the latest and greatest in about a week. We like it better, too. Our focus is on our church programs rather than big parties, etc. We draw names in the family and have a set amount to spend. It is actually a very small amount which takes hunting all year round to find the “perfect” item ( I actually just bought one gift at a church mission sale). I like your posts on thinking of Christmas now because it takes the emotion out of the process which is always what gets to me when I am stressed and feel like I have to be “Norman Rockwell” perfect.

  12. I volunteer for Hospice back home, and we do a reading of Dickens A Christmas Carol Reading, every December. it is combined with local musical talent, a very moving experience for everyone who attends. CBC radio began these readings over 25 yrs ago and we were provided with notes scripts and tips on how to host an event for not for profit agencies . At one time they even provided a guest reader for our event, which was always a crowd pleaser..
    The words of Dickens ring so true that the “business of mankind is our business” when I listen to the voice of Scrooge ask the proverbial question “are there no poor houses for the hungry” I realize that we live in a throw away society , even in regards to people. Have we really come so far as a society that we still have to have food banks and shelters for the homeless while many of us live in warm homes, with plenty of stuff and generous cupboards.
    the true meaning of Christmas is not about stuff, but of people.

  13. I have never even heard of the ING Christmas account, I have to look into that!! What a great idea!

    We have a Discover Card that we use for all our purchases and then (most months 🙂 pay off the balance. We like it because we get money back from most purchases. So far we have enough in the “Rewards” to be able to buy our kiddos and their cousins Christmas presents (6 kids total).

    Last year we all scaled WAY back on all the festivities, candy making, decorating, presents etc. And focused A LOT more on what the true meaning of Christmas is!

    We are revamping our budget this month and I think adding a Christmas fund is a great idea!

  14. My hubby and I have had a very similar discussion about Christmas and gift giving. Some of the things we’ve begun to do include buying things throughout the year when we see them on sale. The other thing we do is give our son three gifts to symobolize the gifts of the magi. Then we’re keeping the meaning in Christmas and not getting carried away with gifts.

  15. We also like to save up all our rewards from our credit card (that we pay off every month) to pay for Christmas presents. Also, every year my grandparents give my husband and I a Christmas check for the same year, so we just plan on using that for all those categories in our budget that go over during Christmas (gas for travel, food for holiday suppers and potlucks, etc.). If we don’t expect to get to spend the money on “fun” personal stuff, then it is easier.

  16. I think this is a great idea. In fact this year, I discovered Swagbucks, and am earning around 30 or so “swagbucks” a day and I am going to use those for our Christmas budget. I will buy what gifts I can online, convert the rest to paypal or cash or however that works, and use it for homemade gift supplies, and holiday treats (cookies, etc), cards, and any food we contribute to the Christmas dinners. No spending OOP! Yay!

  17. My husband and I both realised we were tired of life in corporate America when we had our daughter so we made the decision about 5 years ago to get completely out of debt and fund our retirement by age 50. We have 6 more years to go so we are living very frugally. Our daughter was 1 when we made the decision so she doesn’t really know anything different. She gets SO much from grandparents, aunts & uncles that we do not get her anything and Santa only fills her stocking. She is six now and for the last 2 years she has made all the gifts she has given to her cousins and grandparents for Christmas, birthdays, everything… they all love getting something from the heart and she LOVES to make them. At the beginning of each summer we talk about what she wants to give everyone and we start watching for sales for the materials. We generally have everything made by the time school starts which means we can enjoy the holiday season doing the things we really love.

  18. We have a Christmas budget that includes everything that you have here. It isn’t enough to budget just for presents because what will get you is the extras (meals, wrapping paper, postage, etc.).

  19. Well I have an immensely long ‘giftee’ list that I can’t avoid [a lot of it is business related] and I start as soon as the after holiday sales begin!

    I find it helps me to have a list and a budget for each person [or group of persons – so I have an under $5 list, a $10 list etc – these are the majority of the business folk – as well as the rare few much higher value gifts for some staff members etc] and to keep a list on my computer so that when I find, say, a really cute small item for my MIL at a garage sale or on clearance, I write it down and don’t forget about it, forget to GIVE it, forget I’ve got it etc.
    Also those ‘token’ business gift things are often easiest to get early in the year – which helps to get them out of the way.

    My list helps me stretch my dollar for a bigger splash too. For example I went to the dollar store today to get a few things and found some really nice mirrors of just the sort I’d been thinking that my dds would really like for their rooms. Now I don’t know about you – but I am not as organized as, ahem, I would like to be.

    However for a buck each I grabbed those mirrors [simple silver for the tween, which I will write something inspirational around the rim of; pretty rainbow framed for the second grader ;p] and I wrote it all down on my gift list for the holidays.

    Lo and behold who knew I also bought them each their own hairdryer [in fabulous prints] from target when they were the deal of the day? I’d forgotten.

    So now I foresee an entire ‘in room spa’ package with some dollar store hair doodads/brushes and maybe a new lotion or nail polish . . .

    I could never pull any of this stuff off without a list.

    And with a dedicated ‘gifts’ line in my budget it all gets folded in throughout the year – and at holiday time I have very little left to do!

  20. This is so important! We have a separate savings account that where we budget for “yearly expenses.” Those items that crop up every 3, 4, 6, or 12 months can be a budget buster if we are not prepared. And Christmas is one of our line items in that account. We have about 30 things we save for and each month when it’s time to pay for insurance, pest control, summer camp, or for fun Christmas outings or gifts I know we have it covered! This has truly made a huge difference in our holiday times each year!

  21. It can be hard to start planning for Christmas so far in advance, but you bring up some great points. I love the idea of Christmas Clubs: I remember having one as a kid and was so proud to deposit a few dollars each week and the thrill of watching it grow over the year. Yes it’s harder in “the grownup world” but the fundamental concept is the same: we can do it, if we budget and plan.

  22. 🙂 This makes me smile.
    I just started making Christmas gifts this week and have been shopping all year! Planning ahead really does make a huge difference 🙂