Managing Money

The Easy Way to Do Christmas on a Budget

November 11, 2011

This is part one in a four part series on doing Christmas on a Budget. See part two here.

I’m not the best at budgeting. That’s probably not the best thing for a personal financial blogger to put out there, but there it is.

But where I fail at the big picture, month-to-month budgeting, I like to think I excel at budgeting in smaller, more focused, ways. Like budgeting for a particular event.

This kind of micro-budgeting seems much easier for me to get my head around. And Christmas is one of those times that is perfect for micro-budgeting.

I’m currently in the process of budgeting for Christmas, so I thought I would take you along with me. This will actually be a series of four posts:

  • Today’s post is how to set up a Christmas Budget.
  • The three posts that follow will use the three questions method to help you save money on Christmas.

How to Budget for Christmas

Christmas budgeting would seem to be all about the presents.  That’s certainly a big part of it, and we’ll get to that in a moment, but first let’s talk about all the other things holiday budgeting is about.

Start by making a list of all of the places you spend money at Christmas besides gifts. Anything related to Christmas or the holidays is fair game. Here are some ideas to get you started:

  • Travel
  • Christmas cards
  • Postage for mailing cards and gifts
  • Wrapping paper & supplies
  • Baking ingredients
  • Christmas dinner food
  • Christmas décor (tree, ornaments, lights, etc.)
  • Special clothing
  • Entertainment expenses (dinners out, Nutcracker tickets, etc.)

Depending on your situation, you may or may not spend money on all of these items. Or you may have other expenses that aren’t represented here.

Either way, the more complete you can make your list, the more helpful your Christmas budget will be.

Add in Gifts

Now is the time to add in categories for gifts. Write down every single person you buy for:

  • Family members
  • Friends
  • Teachers
  • Hair Dresser/Postman
  • Coworkers
  • Hosts and hostesses of the parties you attend

Don’t forget to include a line for stocking stuffers. These can sometimes be forgotten in the budgeting process and — despite their small size — they can add up to big money.

This is also a good place to include your holiday giving. Many of us make extra contributions to our places of worship or other charities at this time of year so make room for those so they don’t get overlooked.

Assign Amounts

Now that you’ve got every place you spend money at the holidays listed, pencil in dollar figures next to each item. If you have records from previous years, use them. But if not, don’t sweat it. Just make your best guest estimate of what you spend for each category or person.

Now total it all up.

Does it seem like a lot? It probably does. With all this written down in one place, you can see why the holidays are so expensive.

But you don’t have to spend that much. In the coming week, we’re going to apply the three questions method to your holiday budget so you can cut your spending, but without sacrificing any of the good stuff.

In fact, not only will you save money, but your holidays should seem a little simpler, saner, and more rewarding. So stay tuned for that.

In the meantime, what things do you spend on at Christmas or the holidays? Have I left anything off the list?

This post is part of Works for Me Wednesday.

  1. Yes, it adds up way too fast. I was shocked to see what I think I’ll “need” this year. Hopefully I’ll be able to come under budget.

    I completely forgot about hostess gifts, which will keep me on the lookout for sales on wine…:)!

    Looking forward to your next post on the subject!

  2. Sharon, I think not realizing all the ways we will be spending is what causes us to spend so much. Once the list is down on paper, we can get rid of the stuff that’s not important and find ways to save on the stuff that is.

    Good luck with the wine hunt. I see so many cute holiday gift bags for wine these days!

  3. It has never occurred to me to give a gift to the postman. Is that standard? I don’t have ours listed in our $100 holiday!

    Budgeting is definitely important to keep the spending on target, and there is no way I could do it without a very detailed plan. My $100 holiday is just for gifts, but everything else needs to be budgeted or it can quickly get out of hand!

    1. I don’t think it’s standard. I know some people that do. We don’t because we have community mailboxes, so we rarely see our postman and would have to flag him down as he went by.

      You are so right about the budgeting stuff. Your $100 Christmas is an inspiration!

  4. Micro budgeting. This is fantastic!

    I think your lists are very complete, and may include a few categories that we have cut out. With money tight, we buy for our children and each other only. Extended families are fully aware of this and we ask them to only give to the children if they feel they have to send anything.

    It’s a little clinical, but we are geographically isolated we make up for it with good times when we can be together.

    I look forward to the rest of the posts in the series.

    1. I don’t think it’s clinical, Hunter. I know many families that do the same thing. And I like your idea of spending on good times when you’re together. Experiences always trump presents.

      My husband is one of nine children so we have long since given up on the idea of buying for extended family. We used to draw names, but even that just resulted in a big gift card swap so we let that go too. My side is much smaller (I have one sister) so we do exchange with her and her husband.

  5. It’s the food that really trips up my budget. How do you stick to the plan when there are so many parties and different planning events? And, if you are like most Americans – everything revolves around food! Trying to estimate a limit and sticking to it this year!

  6. It’s good to have a plan! I keep an online notebook of what I spend each year on each person, event, food, etc. It’s kind of fun to try to beat last year’s total. Mostly I save by shopping year long for deals. I also have a lot of recipes on my blog for inexpensive entertaining. There are quite a few ideas for DIY gifts too. I’ll be looking for the rest of this series!

  7. Such a thorough list of things to put on your Christmas budget! I never would have thought to include special clothing in my budget!

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