5 Tips for Creating a Holiday Budget

5 Tips for Creating a Holiday Budget

Is it just me, or do the holidays always seem to creep up on us?! Seriously…I blink and VOILA, it’s Christmas season! Is your holiday budget ready?!

Don’t get me wrong, it’s the most wonderful time of the year and all that, but from a financial standpoint…it can put a hurting on your budget! Let’s vow to make sure that doesn’t happen this year.

One of the best ways to financially prepare for the holidays is to create a holiday budget! That’s right: a budget designed with the anticipation of seasonal spending.

The sooner you can get that plan in place, the better off your wallet will be. I’m sharing 5 tips for creating a holiday budget that helps you feel ready for the seasonal festivities.

5 Tips for Creating a Holiday Budget

#1 Assess what you already have saved for holiday shopping

If you’re one of those A+ personal finance students who has a sinking fund year-round for holiday shopping, then way to go!

If not, consider starting one for next year. Whether you have the year-round holiday shopping fund or not, take some time to think about what you already have saved for holiday spending.

It doesn’t have to be much, but knowing you already have something saved for the holidays makes you feel so much better than starting from scratch.

If you don’t have anything saved, no worries—we’ll just have to make it a priority moving forward. Time is ticking!

#2 Consider skipping the recreational categories until the new year

You already know that I think fun/discretionary/recreational spending categories should be in everyone’s budget. It’s a requirement for consistent and sustainable budgeting.

However, if you don’t have anything saved for the holidays and need to create your holiday budget, I recommend cutting out these categories.

A better way to phrase it is to repurpose these categories to holiday shopping. The money you already budget for fun spending can be used for your holiday shopping, with no impact to your normal numbers.

It may not be as much as you need or would like, but it’s certainly a start.

Uncomfortable with repurposing all of the amounts allotted for your recreational categories? Pick and choose what gets allocated to holiday shopping. Anything is better than nothing.

#3 Add in seasonal categories to keep you on track
Do you make a new budget every month? Then, we are one and the same! Every month I create a new “tab” in my budget spreadsheet document and create my new budget for the month.

This allows me to add in categories that may not be there year-round.

I recommend adding in seasonal categories to your budget to help you keep track of what you want to spend and what you actually do spend.

Your categories could be: Holiday Gifts, Seasonal Activities, or Festive Spending.

Once you have your seasonal categories added, you can allocate your income to them. This falls in line with the tip above: repurpose your recreational spending limits to your new seasonal budget categories.

#4 Are the numbers in your budget realistic?

Since your budget should include your income, you’re able to see if the money that you allocate to your budget categories is in line with what you actually bring home.

It’s so important to make sure the numbers across your budget categories are realistic.

If you’re budgeting to spend more than you make, that means you’ll end up tapping into savings or using credit cards. Unless your savings are designated for holiday shopping, we don’t want either of those scenarios to happen!

If you have to limit what you spend on holiday shopping, gifts and activities, then so be it.

Trust me, you’ll feel better when the holiday season is over. Check out 5 Reasons Not to Go Into Debt During the Holidays for some more motivation.

#5 Where can you reduce holiday spending costs?

Reiterating my point above, overspending on the holidays is never a good idea. We get a new holiday season every year, and overspending during it can mean you’re left feeling guilty.

Think about what you can afford to spend on the holidays when creating your holiday budget and ask yourself where you can cut back.

Can you re-gift gifts? Can you find a bottle of wine in your pantry as your party gift? Where can you reduce your holiday spending costs, but still make sure you’re partaking in the magic of the season?

This will take some creativity, but it will get easier and easier as the years go by.

Related: 6 Ways to Make the Most of Holiday Spending

The earlier you can get a holiday budget laid out, the better off you’ll be. Not only will you feel more in control, but you’ll have spending limits to stick to – this can help you avoid debt or unnecessary savings usage.

The most important thing to remember is that the holidays happen every year. Drop the pressure to give lavish gifts. It’s really not necessary.

How do you create a holiday budget? Have you ever planned ahead for holiday spending? Share your experiences in the Comments section below!

The CGS Team



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