This is part two of a four part series on holiday budgeting. Part 1, Eight Ways to Save Money for Christmas for tips on finding cash to fill out your budget.
The key to successful holiday spending debt-free is knowing how much you have to spend and carefully allocating those dollars to the things you most want to do or give. Use these four steps to plan an accurate, affordable, and pleasing holiday budget.
Step 1: Determine what you can afford to spend.
Look at how much you ve saved for Christmas this year, the paychecks you will receive between now and 12/25, and the other bills you need to take care of. With all of this information in front of you, choose a number that is affordable and joyful. Double check to make sure that your budget balances and then move on to step two.
Step 2: Make a list of all the things you want to spend money on during the holiday season.
Try to think of all the things you might spend money on. Here is a list of common Christmas spending categories to get you started:
- Gifts and Cards
- Food (special meals at home as well as dining out)
- Decorations
- Charitable Giving
- Entertainment
Step 3: Divide your holiday budget up between those items.
For tips on how to divide your budget, let s look at two categories: gifts and entertainment.
Gift Giving:
Make a list of all the people you want to buy gifts for and how many gifts you plan to give them. Then put a monetary amount next to each name. Add them all up. If you match or are under your total gift budget, great. Go shopping and take your list with you to remind yourself of your budget. Come in too high? Go back and figure out who you can spend a little less on. Remember, how much you spend doesn t equate to how much you love someone.
Entertainment:
This category can encompass just about everything else you spend money on in December from food for a holiday party to going out to the movies with the kids while they re off from school. Take your time and be realistic. You don t want to under budget on this section. Give yourself enough wiggle room to do the things you really want to do. But also remember that some of the most fun things to do are free or cheap: play board games, bake cookies, sing Christmas carols, etc.
Step 4: Track your spending during the holidays and regularly check it against your budget. Adjust as necessary.
Use a tool like BudgetSimple to track your anticipated spending against your actual spending. Seeing the real numbers will help keep you on track and help you get back on budget if you splurge on something unexpected (which we all do).
