Use a Christmas Budget and Make the Holidays Merry and Bright

Let’s use a Christmas Budget! Feeling the financial pressure of the Holiday Season? Wondering how much to put aside for your Christmas fund? This post will cover these questions and more! Remember – being able to set up and use your Xmas fund starts with how you handle money day-to-day. Start now, build a Christmas gift budget, prepare, and come through this season stronger than ever!

The Family Christmas Budget

Take a few minutes, set up your Christmas Budget, and prepare to enjoy the most wonderful time (and my favorite) time of year.

Christmas Present Budget – How much does a Holiday cost?

According to the National Retail Federation, we all spent about $1,000 in 2020. In 2021, the NRF predicts an increase of 8.5% – 10.5% for 2021. By comparison, in a 2020 Gallup poll, the average spending of Americans fluctuates year-to-year. Regardless of the economic circumstances, holiday spending can be a big portion of an annual budget! Assuming $1000 as a baseline, what other costs are there?

In my experience, we also tend to buy a lot of extra “treats” around the holidays as well as gifts. Factoring in the additional costs of special food purchases also increases the cost. Travel costs are a reality to a certain extent as well. Some of us will have more or less traveling to do, and those costs are an item on the budget to keep in mind too.

I say all of this to point out the costs don’t stop with gifts and decorations. Regardless of the seasonal fluctuations let’s just say about $1,000 depending on various economic factors (size of household, cost of living differences based on geography, etc.). $1,000 seems like a lot (and it is), especially looking at it holistically! We’ll consider this a minimum.

Why is a Christmas Budget so important for the Holiday Season?

Coming up with at least $1,000 (and in many cases, even more) is just an estimate. The key is managing that relative to your situation, and using a budget is just the tool for the job of creating a Christmas fund. Without a budget, it is all too easy to spend more than intended. Especially around holidays, the ‘grand’ could easily increase.

A Christmas Budget keeps your Finances on Track

A Christmas fund helps you plan in advance, and also helps reduce stress. It will also keep you honest! Even by accident, we can forget how we’ve spent already and a budget keeps your finances on point. Keep in mind, by using a proper budget, you can smooth out the financial impact of the holidays by shopping the bargains and saving throughout the year. If you haven’t set up a budget yet, I highly recommend this year-round approach (don’t stop using a budget after the holidays)!

Combat Financial Stress: Use your Christmas Budget

This is a very real aspect to keep in mind! Many of us are already stressed out with the holiday season. Adding financial pressure is adding to the load. I’ve heard stories first-hand about paying-off holiday debt throughout the next year, just in time to do it all again. Tons of stress. How sad – that doesn’t have to be the case!

Use your Christmas Gift Budget and Budget Everything

In the beginning, I had “a feel” for where we were on the budget and made my decisions based on my best estimates. That was a mistake! Budgets work best when everything is written down, categorized, and tagged. Take the guesswork out of it!

If you find that you need more detail, create sub-categories as well. For example, instead of a “Gifts” allocation, try “Kid’s Gifts”, “Sibling Gift-Exchange”, and “Holiday Charity Giving” to better track what you’ve spent. The same goes for the holiday decor and other holiday spending: try to be specific relative to the number of moving parts in the bucket. 

Don’t forget Wrapping Paper and Tape!

One thing that always trips up our budget is the tape and wrapping paper! Now, we’ve created a budget for that too. (“Pro tip” here – shop for it year-round, and buy offseason). Back-to-school shopping also provides access to tape, and we stock up when we can. Keep a lookout!

Christmas Shopping on a Budget – Spending Tips and Saving Money

Ok, now we’re focused on the minimum $1,000. But is that even enough? Here are a few thoughts for your consideration. Keep in mind, everyone has a different situation and scenario and this is intended to be a starting point.

Christmas on a Tight Budget: How much Money do you have to Spend?

A great question to ask yourself is “how much do I need?” so you can begin to budget properly. Without knowing where you need to be it will be more challenging to prepare in advance.

Make a list of the people and events you buy for in the Holiday Season…

Grab your favorite pen and paper combination, and let’s make a list. Start with writing down the obligations. Think about it, and keep it in mind year-round. That way when a good deal pops up you’ll be ready to strike.

For example, in my case this year, I have my immediate family (wife and kids), parents on both sides (Laws and In-Laws), sibling gift exchanges (Laws and In-Laws), nieces, and nephews. Additionally, we like to participate in at least one charitable event and have enjoyed supporting Operation Christmas Child.

Great Minds think Alike

Feeling overwhelmed by the heavy burden of buying too many gifts? Feeling like the gifts “aren’t enough” for various family or friends? In my experience, chances are you’re not the only one feeling this way. Talk to your family about cutting back, setting limits (e.g. Sibling Gift exchange for $25 or less), or even doing away with individual gifts and going doing one big charitable donation. Be honest, state your case, and come at it from a team-player perspective.

Also, keep in mind that some people are “wired” gift-givers. When the suggestion of not doing gifts comes up, it could be received as “not loving anyone” anymore, etc. If you have people in your family who feel that way, avoid hurt feelings by approaching the topic before the Christmas buying starts up. Don’t wait until the last second. By then, it could come across negatively.

Saying Thanks!

Keep your eyes open throughout the year for those awesome sales where you know “someone” can use it (but no one comes to mind right away). It is ok to use your Christmas gift fund throughout the year!

We like to pick up those <$20 items when the budget allows and keep them stored for last-minute gift-giving. We also like to use those items for teachers, coaches, and instructors who have really made a positive impact on our children’s lives. Small token ‘Thank You’ gifts are a great way to show appreciation without making it awkward, and it is relatively easy to do.

DIY Gifts (and Re-Gifts) in your Christmas Gift Fund

I’ll be the first to say there’s nothing wrong with re-gifting. If there’s something you get that is nice (don’t be a “cheap” Grinch) but you really can’t use it, consider re-gifting. It isn’t appropriate for every situation, but it could come in handy.

Another great way to save money and give a high-quality gift is to leverage your skillset. We’re all uniquely blessed and equipped, and perhaps that is something you can do or give to a loved one during the holidays.

Gifts don’t have to be material items either! We LOVE good food, and some of the best gifts we’ve received have been dinners out or homemade soup mixes. Keep your eyes peeled for discounted gift cards or “buy in bulk” discounts for your favorite restaurants. For example, providing a night-out to new parents is a blessing (speaking from first-hand experience here 🙂

Mêtis in our Christmas and Holiday Budget Matters

My wife and I are always thinking about how we could “do the holidays better” and gift shopping is up close to the top of that list! There’s certainly not a “secret formula” (if there is, my wife and I have yet to discover it at least) to guarantee a perfect holiday season, and I suggest that it is a constant effort of improvement.

Don’t Destroy your Holiday Budget with Credit Card Debt

A sure way to add pain, anguish, and frustration to your life is to load up on credit card debt. It is a rough place to be, and I wouldn’t wish it on anyone. No matter what, do not buy what you cannot afford. Gift-giving isn’t about dropping stacks of dollars. It is about the thought, the exchange, and the token of love for that person.

Don’t fall into the trap of subconsciously thinking that you’re not being a good parent/ friend/ spouse if you don’t buy expensive and excessive gifts. That just isn’t true. If you find that “stuff” is the only way to be happy or create happiness in others I recommend trying to explore that in your life. Also, and regardless of your predisposition, I think doing charity work helps with perspective and provides clarity of focus.

I will say, if you are handy with credit cards and do not have a credit card debt problem, then you might be able to take advantage of the spending to collect some points. I recommend that with caution because a lot of us think we have a handle on it when the honest reality is that we don’t! This is coming from a pure-blood spender too 🙂 And so, my point is to be very careful and honest with credit card use.

Budgets and Sales are the Best Way!

Like a lot of people, we have to make conscious decisions on what we’re going to buy and not buy. Budgeting is a fundamental part of the process – we’d be lost without it. We try to buy throughout the year and eliminate most of the shopping with opportunistic shopping. Taking advantage of sales like Prime Day, Back-to-School Shopping, Black Friday, and Cyber Monday are all generally productive times to spend and the budget allows us to be ready for those sales.

Teamwork makes the Dream Work

Also, we’ve learned to rely on each other’s strengths, especially during the holiday season. As a couple, take a joint “look in the mirror” and see who is better at various tasks. Striking a balance is essential! For example, I’m the spender, and my wife is the thrifty one. I also prepare and balance the budget (i.e. number crunching), and we review it together. My wife takes a hard look at what we’ve allocated, we make any adjustments and agree on the final plan. After that, we look ahead, and we take a look at what we’ve spent. We also take a look at the budget from an annual snap-shot so we can be planning ahead for things like Christmas shopping.

Regardless of where the coming holiday finds you, I wish you and your family a warm, and Merry Christmas!