How to Create & Stick to Your Holiday Budget

Pumpkin spice is back! Love it or hate it, it signals the beginning of the holiday season. It’s a wonderful time of the year, but it can also be challenging on the wallet.

Don’t miss these tips to avoid a debt hangover in January.

Creating a Holiday Budget is the vital first step to avoid overspending. It’s your thoughtful plan to guide your holiday spending.

Step 1: Grab a blank sheet of paper

Step 2: Write down the amount you saved for holiday expenses.

• This is simple: list the amount you have set aside from your income to spend during the season.  
• Please avoid debt spending, i.e., spending you cannot pay off when the bill is due. Debt spending sets your finances back and adds more stress than merriment to the season.

Step 3: List, in writing, all the various costs of the holidays/giving season.

Holiday costs go beyond just gift-giving. Every family is unique, so take some time and think about what is unique for you and your family. 

Here’s some items to think about: 

• Presents/Gifts for immediate family (mom, dad, kids)
• Present/Gifts for friends, family, teachers, etc.
• Christmas cards, stamps, mailing packages, gift wrap 
• Home decorations-interior
• Home decorations-exterior
• Travel expenses
• Houseguests (more food, electricity, gas, etc.)
• Parties/Holiday events: tickets, babysitter, new clothes, etc.
• Time-off work that will be unpaid

Step 4: Decide where to spend the money you’ve saved.  

If you’re like most of us, you won’t have saved enough money to cover all the things you’d like to give and experience during the holiday season. So, now it’s time to prioritize.

1. Rank items by what is most important to you and decide on a dollar amount to spend on each item. Ask yourself…

• Which things will I/my family enjoy most?
• What items do I not enjoy or do just out of obligation?
• What items can we live without?

2. Think about what items on your list you might be able to reduce the cost of or delay for another year.

For example, Miriam and Miguel want to take a trip to visit family, give gifts, and go to a special holiday concert. They realize the amount of money they’ve saved will not let them do it all. They don’t want the stress of holiday debt. 

They decide this year to travel to see their family, which will be their gift to themselves and their family members. Next year, they’ll prioritize the holiday concert and gifts and won’t take a trip to see family.

You now have your budget. You just have to stick to it.

3 Tips to sticking to your holiday budget: 

1. Get an envelope or plastic bag
   • Put in your List of Holiday Expenses, with the amount to spend for each item.
   • Put in the cash you’ve saved for Christmas Spending (if you don’t use cash, keep written track of your spending.)
2. Use communication & self-discipline to stick to your goals
3. Mind-set wise, sticking to a budget is often about being specific and accepting that you won’t be able to do it all.  

If you’re feeling pressured to overspend this holiday season, here’s an encouraging word from the Grinch in Dr. Seuss’s classic tale, “Maybe Christmas doesn’t come from a store. Maybe Christmas, perhaps, means a little bit more.”