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Make a Holiday Budget

The solution to holiday overspending is simple: make a budget and stick to it.

First Step: Make a Wish List

When you start to think about making a budget, consider all the things you could potentially spend money on. Include everything--at this point, you are simply brainstorming. Here are some things that might be on your list:

  • Gifts: who do you need to shop for? Family, friends, kid's teachers, co-workers, surprise drop-ins, etc.
  • Food: will you be hosting or attending a pre-holiday party? Hosting or attending holiday dinner?
  • Travel: and we're not just talking airfare. Even if you are only traveling an hour or two here and there, it can start to add up, so think about how much extra you'll need for gas, trains, etc.
  • Fun stuff: whether it's ice-skating with the family, a nice dinner out, or an extra round of hot cocoas before you go Christmas-light-gazing, allow yourself money for frivolous holiday fun. 
  • The holiday "look": with holiday parties and trips to the grandparents' house, think about what you'll need to get the kids and yourself spiffed up: long-overdue haircuts? Clothes for holiday portraits?
  • Charities: do you usually donate gifts or food to a charity organization?

Again, don't be shy here--you'll edit this list in the next step when you start determining "wants" versus "needs."

    Step Two: Divide and Conquer

    Now that you've written out items that would be included dream-budget, it's time to separate them into three categories:

    • Needs: these are the things you will spend money on, so you definitely need to plan for them (e.g., gifts for family or travel). 
    • Wants: items in this category are the things you don't absolutely need, but it'd be really nice if you were able to put some money towards them. (A bottle of nice wine for the host who always throws the great party.)
    • Extras: these are the items you definitely don't need, but it sure would be fun to throw some cash in the direction of one or two. (Do the kids have their hearts set on ice skating? It's probably worth it to make it happen.)

      Step Three: Dole out the Cash

      Using your three lists, you can now decide how much money to put towards each item. Start with the "needs," then edit "wants" and "extras" as you go (remember "edit" doesn't necessarily mean delete--try to keep a nice balance).

      Here are some tips for creating your final budget:

      • Be specific: for as many items as possible, assign a dollar amount you are willing to spend. (This could include gifts, food for parties, etc.)
      • Be decisive: yes, you'd love to include everything, but it's up to you to decide what's really important--be thoughtful, but don't spend too much time wavering. Decide, and then go with it.
      • Be realistic: it can be easy to overextend yourself out of a sense of obligation around the holidays, but only you know what you can swing, so keep it simple and do your best. And don't deny yourself too much of the fun stuff; instead of saying "no" to all the extras and caving later, allow yourself at least one--budget for it, then enjoy it.

      Stick to your budget as closely as possible, but don't let it rule your holidays. Make trade-offs where necessary and modify your plan with the unexpected occurs. Most of all, think of your budget as tool for enabling holiday fun--not restricting it!

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          Feb. 4, 2010 4:27 pm
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