How to Create and Stick to Your Holiday Budget

Sarah Brumley

Sarah Brumley

If we’re being honest we can say: it’s the worst time of the year for budgets. With the rising cost of toys, books, food and decorations, it’s no wonder that January 1st comes with the need to put huge restrictions not only on our eating habits, but those of our spending as well.

Not this year.

Repeat it with me: Not this year.

Did you actually say it out loud? Did you actually mean it? If not, let’s try it out for a third time just to make sure.

NOT THIS YEAR.

This year we will stick with the holiday budget and the allotted amount of money we have for the festivities. This year we will recognize that all of the efforts we’ve made so far this year don’t have to go by the wayside in order to impress those around us. This year will be different.

And let me tell you…it’s a tall order for the weeks ahead when critical family members show up to dinner or your kids are waiting for that perfect toy that they will play with once and never use again.

But even so, it is possible and today I’m going to show you how.

So, if you’re ready to embrace the upcoming holiday season with a new perspective – one that doesn’t leave you struggling financially in January, then this episode is for you. Grab a pen and let’s get started.

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How to Create and Stick to a Holiday Budget

Well hey there and welcome back to this episode of the Financial Fix Up Podcast. I’m your host, Sarah Brumley, and I’m so excited that you’re joining me for the first episode in this years holiday series. I’m really excited because truly, I believe that the months of November and December really are the most wonderful time of the year. Well, except for my birthday – that’s February – but even so, I really love the holidays. I love the decorations, hosting parties, enjoying the company of friends and family, and quite honestly, I love the food – those special things that we only eat over the holidays.

But I do want to say that I haven’t always felt this way. In fact, there were many years where just the idea of the holidays approaching made me sick to my stomach because I knew that we couldn’t afford the holidays. Like at all. And we really struggled to draw boundaries around outings, around gift giving, around those potluck meals where we honestly couldn’t afford to bring a dish to share and because of that, we’d find ourselves in January trying to dig our way out of a financial mess that we hadn’t even wanted in the first place. And then we would spend the whole year doing so only to repeat the process next December.

Not good. Not good at all.

And maybe that’s been you OR maybe that’s exactly what you want to avoid. If so, you’re in the right place because I’m dedicating the next few weeks to talking about the ins and outs of navigating the holidays, relationships with family and friends, and all of the things with a frugal but generous mindset. And yes – there can be both! And it doesn’t have to be complicated.

And today I want to start with one of the most critical pieces to holiday financial success and that is creating and sticking to a holiday budget. And as my gift to you, I am offering My Holiday Budget Worksheet FOR FREE to help you get and stay on track and I’m going to walk you through how to use it so that you can find success as well. So, if that’s something you’re interested in, you can find it at lemonblessings.com/holiday.

Alrighty, so…now hopefully you have that worksheet in hand and are looking at it. If you don’t have it, that’s okay. Just grab a piece of paper and follow along and let’s go ahead and talk first about how to create that holiday budget.

Step #1: Determine How Much You Will Spend

The first step to take is to determine how much you will spend over the holidays. Now, this could be Christmas or Thanksgiving or a combination of both, but personally, I like to do a separate worksheet for each one. In this case I’m going to be working through this for a Christmas budget, but you can customize it to fit your needs.

Now, ideally you’ve added a Christmas line item to your regular family budget so that each and every month you add a little money to that fund and then when Christmas comes around the amount is already there and ready for use. I do this starting in January by putting a little aside each month, and that helps to offset the majority of our costs for Christmas.

Of course if you haven’t spent the last year putting money aside, then you need to decide how much you can feasibly spend on the holidays this year. That starts by taking a good look at your current financial situation (and your budget, too) to determine how much you will spend.

Now, I hope you notice that I didn’t ask you to determine how much you NEED to spend. That’s an important point to make because, just because you think you NEED to spend $20 per person for Christmas or you NEED to send out 150 Christmas cards, does not mean that’s the RIGHT decision for you to make at this time. Start first by determining HOW MUCH you can spend and, don’t worry, we’ll do our best to make it work from there.

Once you have that amount, add the number to the box on your worksheet.

For the case of this example, I’m going to say I can spend $200.

Step #2: Determine What You Will Spend Money On

The next step is to determine what you will spend that money on.

And if you’re looking at the Holiday Budget Worksheet, you’ll notice that I’ve split it into five categories that I believe mostly encompass holiday preparations. Of course, if you have different expenses, then you can decide how to fit those in as well.

Travel

The first category is travel. If you are traveling this holiday season and haven’t already paid for the travel, you are going to add the amounts that you will need for travel into that section. You can break it down by type of travel expense, such as gas or car rental, hotel, whatever it might be, or you can have a lump sum for the total travel expenses you can spend.

In our case, we don’t travel for the holidays, so I’ve left that category empty.

If you have an amount there, you’ll want to subtract your total travel costs from your holiday budget and then note how much you have left over in the remaining holiday budget space.

Food

The next thing to consider is food. Whether you are hosting a party, a small group of friends, or even attending a potluck style gathering, there will likely be food costs associated with the holidays. I recommend estimating the food budget you will need outside of your normal monthly budget and add that amount to the food line. In my case, we host a Christmas party, so I’ll add that as an event and we also have a special meal on Christmas day, so that will be included. Other than that, our food costs throughout the month remain fairly consistent and will fall within our regular monthly budget.

Once again, write down those estimates and then subtract the total from your holiday budget.

Décor

Lets talk decor! If you are planning to add or replace your holiday decor or simply don’t have any to begin with, it’s important to include the amount you will spend in this category. I, personally, tend to add a couple new items each year, so I add a little money to this category to make sure I’m covered on that front.

Remaining Budget

Using my example number of $200, let’s say that after subtracting my travel (which was zero), food (let’s say $50), and maybe $15 for decor, I then would have a remaining balance of $135. That’s important to know because the next category is gifts.

Gifts

And of course, the part of Christmas that everyone loves is the gifts, so the next step is to write down each and every person you want to give a gift to this season. Make sure to include any small gifts you will give to co-workers, Secret Santa-type events you are signed up for and, if you participate in Operation Christmas Child or a similar program, add that as well.

Then, go ahead and add a rough estimate of what you intend to spend for each person or event, making sure you stay within that “remaining balance” you had left after travel, food and decor.

In my case, I had $135 left over, so I’ll likely divvy that up based on gifts for my husband, kids, parents, nieces and nephews, and a friend or two. And I always start by listing out their names first. Then, I go down the list and allocate the money based on need and level of importance. It might sound harsh, but I’m probably going to spend more on my husband than I will on my nieces and nephews, right? That’s okay! Remember, no one will see this list but you. Also, if you’re responsible for divvying out the cash for a gift for YOU, don’t forget yourself.

Step #3: Consider Alternatives To Stick to the Holiday Budget

Now if you find that your holiday budget doesn’t seem to be enough to cover everything (or everyone) on your list, it might be a good time to reconsider what you are doing with your money this season.

In the past, have you gone into debt making everyone’s Christmas dreams come true? If that’s the case, then you might need to scale back and make sure you are taking care of you (and your family budget) and enjoying a guilt free holiday season.

I’d say that, for us, travel has always been the hardest part of a holiday budget, especially when it comes to visiting family. If you are already finding that the cost of your travel exceeds your budget for the holiday season, it might be time to reconsider that trip completely. Give it some serious consideration. What are your long-term goals? Does taking this trip this holiday season help you keep with them, or will you end up regretting the whole thing come January 1st?

If decor is the issue, then as yourself the following: is that set of new lights really necessary or could you hang on to the old ones for another year? Would your artificial tree, even slightly chewed up by the dog, be a better use of your efforts this year instead of the cost of a new one?

Rather than being responsible for the entire Christmas dinner, could you ask your family to bring their favorite side dish, thus making it more of a pot-luck style meal? Or, if that’s not possible, maybe they’d be willing to contribute a little money toward the meal you’re planning?

Buying All The Gifts

And then there’s the gifts. And here’s the deal about gifts: chances are, if you are finding it hard to purchase gifts for each and every person on your list, the people around you are as well. As a family, we’ve used several different techniques over the years that seem to help with that, so I just wanted to briefly touch on those now.

DIY Gifts

Those DIY gifts can be a great way to save a little money while also giving a fun and thoughtful gift. Now, I do have an entire podcast episode on this topic, so if you are even thinking about starting a DIY project, make sure you check it out.

The best part about DIY is that you can make a project specific to those you love and can often make a large batch of something that everyone can have a part of. Some of my favorite and, not to expensive DIY Christmas gifts have included candles, lip balm, bath products, and even hand warmers. You might even considered candied nuts or baked goods if that’s your thing. Of course, the sky is the limit based on your own abilities.

Quick Public Service Announcement: If you are not naturally a crafty person, it’s important to remember that just because it looks fantastic on Pinterest, doesn’t mean yours will, too. I know that sounds harsh, but you’d rather I remind that ahead of time, right?)

Stocking Stuffers

One of my favorite years was the time when my family decided that we were only going to give gifts that fit into stockings. We did this with our larger family and the really cool part about it was that those people who could afford a little more and chose to spend more could do so, as long as the item fit in the stocking. On the flip side, though, if a person couldn’t afford to spend a lot of money on each and every person, they could add a small bag of candy or something else equally inexpensive to the stocking and no one was any wiser.

It was a win-win situation for all involved and I’d highly recommend trying it.

Kid Gifts Only

MY husband LOVES getting gifts, so we’ve never tried a Christmas in which only the kids get gifts, but I do know that many people do this regularly and are successful with it. So, if you feel that you could cut out adult gifts, then this might be a good money-saving option for you.

Draw Names

Similar to the Kid Gifts Only is the idea of drawing names. We’ve done this with different family members over the year and it’s been a huge money saver for all involved. Each person draws the name of another adult to give a gift to that year and typically we have a certain amount that each person is going to spend. We’ve always purchased gifts for all of the kids as well, but the nice thing is that everyone – even the adults – have a gift to take home with them at the end of the gathering.

How Will You Stick With Your Holiday Budget?

And there you have it, by this point you should have a holiday budget in the works. In fact, if you followed all of these steps, you know exactly how much you CAN spend this year without landing yourself in a world of January hurt. And you know exactly WHAT you are going to spend that money on.

This year we will stick with the holiday budget and the allotted amount of money we have for the festivities. This year we will recognize that all of the efforts we’ve made so far don’t have to go by the wayside in order to impress those around us. This year will be different.

It does not have to be the worst time of the year for your budget. In fact, how amazing will it be when you enter the upcoming year without having to enact a financial diet. Won’t that feel great?

I think it will.

Now I do just want to say if you are still unclear as to how to make your holiday budget work or you’re struggling with how you are going to broach this subject with family or friends or whoever it might be, stay tuned. Over the next few weeks I’m going to give you simple strategies to stay on track, to have those hard discussions, and to navigate the holiday season in a way that blesses those around you – without destroying your finances at the same time. Okay?

And if you didn’t get the holiday budget worksheet yet, make sure to grab it at lemonblessings.com/holiday.

Whatever you decide, just know that I’m cheering you on! You’ve got this! Have an amazing day and I’ll chat with you again next time!

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