Christmas on a Budget

Ho! Ho! Horror Story! At least that’s what some people think when they get their credit card bill the month after Christmas. The holidays can be such a special time of year, but many people poison their fruitcake with financial cyanide.

The best thing to do? Budget.

The word “budget” often gets treated like a four-letter word, its association to people whose finances are tight. In reality, a budget is simply a written plan to dictate where your money goes. It allows you to control your money instead of your money controlling you. The wealthiest people in the world, no doubt, operate off of a budget.

So when I say “Christmas on a budget,” I don’t mean you have only a little bit of money to spend, I mean you have a game plan that will prevent you from having financial hangover the day after Christmas.

After writing a family budget six years ago, Brent and I have experienced zero Christmas money stress. Before that, we had some mythological number we spent during the holidays, we closed our eyes when we went shopping, and we just hoped for the best.

The idea is simple. Write a list of all the people/things you need to spend money on during the holidays. For us, this even includes categories separate from gifts.

These are the categories we have listed (all of them might not apply to you, or you might have additional ones we don’t):

Family (list each person by name)

Friends (list each person by name)



Kids’ teachers

Secret Santa gifts for anticipated parties

Service providers (I always give a gift card to my hair stylist every year. Just an extra “thank you” for making me feel gorgeous all year long)

Supplies (Christmas cards, stamps, wrapping paper, shipping costs)

Food (Are you planning on eating a special meal out during the holidays? What about extra baking or hosting family for a dinner at your place? It’s nice to pad your grocery budget with some extra room for additional expenses in this area)

Charity (Brent and I have traditionally adopted a family during the holidays. We’ve also filled shoeboxes for Operation Christmas Child, or have prayed for God to give us an opportunity to bless someone who needs it).

Miscellaneous (You might as well go ahead and anticipate that extra expenses are going to arise during the holiday season, something you forgot to budget. So, Brent and I always have an amount set aside as a safety net)

Once you’ve listed every possible person/category, set a reasonable dollar amount next to each item.

When you add up your entire list, divide it by 12 to see how much cash you should set aside each month during the year so you have the full amount in December. If you’re starting now, divide it by how many months you have left until Christmas.

If the monthly number scares you, that means you need to go back and adjust your budget. You might have to cut some categories or lower dollar amounts.

A few notes:

  1. Always set limits with those you exchange with. Communicate what your cap is. This takes away the guessing game and protects both parties from feeling like they “didn’t spend enough” or “spent too much” on the other person.
  1. Don’t be afraid of suggesting a non-exchange. Brent and I used to exchange with my youngest brother and his wife. Once they had their first son, we decided to get for our nephew while my brother still bought for us. Once Elizabeth came along, we no longer exchanged as siblings, but bought for each other’s kids. There are some people we have completely eliminated spending on by saying we will just exchange cards.
  1. Don’t let guilt make you run out and buy something. You know what I’m talking about. The unexpected gift given to you. Brent and I have had this happen on several occasions. The Christmas after we first moved into our new home five years ago, a neighbor down the street brought us a bottle of wine inside of a stocking along with some home baked goodies. We thanked them for the gift, but didn’t give anything back to them in return that year. What we did do was hang on to the stocking, and the following year, we returned the favor.

The same has happened at family gatherings. We’ve had people bring a small gift for Elizabeth when we hadn’t bought anything for their children. We thanked them and then the next year, we bought for their kids.

4. If you shop sales, you can actually spend the dollar amount in a category without actually “spending” all of the cash. You can stash the difference away for something else, or if gifts are your thing (like they are mine), you have freedom to buy an additional item or items in that category.

If you plan, save, and spend within the limits you set for yourself, you can relax on Christmas Eve as you take in the splendor of your Christmas tree. Brent and I always look at each other in the midst of the glorious glow and say to each other, “It’s so nice knowing that every single thing under that tree has already been paid for.”

We wake up the day after Christmas and feel a sense of relief. We won’t receive a credit card bill as a belated Christmas present from Satan…I mean, Santa.

…And then starting in January, we set aside our first installment of cash for the next Christmas and do it all over again!

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