Your Money: Holiday Budgets

I love the holidays. I love giving gifts. But when money is tight, I must admit that it’s not the best tie of year to be on a budget. So how do you make it through without feeling like a complete Scrooge?

Make the Cuts
The first step is to take a good hard look at your shopping list. Who do you usually buy for? It may sound heartless, but are there people you can cut out? Chances are you’re not the only one who could use a reprieve. Perhaps there are people you can talk to and arrange to not exchange gifts. Or for a group of friends, coworkers, or family members, try a Secret Santa exchange so each person only has to buy one gift, but everyone receives something. Another option — especially for families — is to only buy for the children, not all of the adults. Or plan a holiday gathering rather than gift exchange so you spend the holidays dwelling on the experiences and time together rather than the material possessions. Make it a potluck so everyone has the opportunity to contribute.

Specify a Price
Once your list has been pared down, it’s time to determine how much you’ll be spending on each person. Figure out how much you can spend overall for gifts, then break it down among the recipients. It doesn’t have to be an even split — those closest to you will likely receive the bulk of the budget. If you’re a bargain hunter, you can likely get away with spending a bit less while not looking cheap.

Stick to the Budget
The easiest way to make sure you adhere to your designated budget is to get it all in cash. When the cash is gone, you’re done. No ifs, ands, or buts. It helps you avoid the temptation of whipping out a credit card and going way over budget. To make it less messy, get an envelope for each person you’re buying for an insert their individual budget into the envelope. That way you can track how much you’re spending on each person and can make sure you’re not going over. (If you’re shopping online, it’s OK to use a card — just make sure you take the cash out of the appropriate envelopes and deposit it right into your bank account so you’re not tempted to spend more. Or, better yet, purchase a prepaid gift card or credit card with cash, and use that online.)

If you’re really not into cash, you can also use apps designed for gift giving. Browse the app store for your smartphone (or do an internet search for programs on your computer) and look for gift list tracking programs. Some will allow you to assign and track a budget for each person, or each group of people, so you can see how much you’re spending. Just don’t forget to insert all the items you purchase!

Go Shopping
Shop around before settling on a gift. Make sure you’re really thinking about what you would like to get each person. It’s easy to get into the “he would like this — but he would like this, too…and this, and this…” mentality when physically in a store. To avoid that, make a list of possible gift ideas before heading out and do some research to get a feel for how much they should cost you.

Some other tips:

  • If you’re buying online, don’t forget to take into consideration the cost of shipping, if applicable. It may not be the actual cost of the gift(s), but it’s still money you’re dishing out.
  • If money is really tight, avoid gift cards. They show exactly how much you spent and can make you look cheap if the amount isn’t “high enough.” Instead, look for less expensive gifts the recipient would enjoy.
  • Don’t forget gift wrap. Paper and bags cost money, too, and should be considered when calculating your budget.
  • When you’re out shopping, look for sales and deals to help you stay in budget. When you find a great deal, you have a couple of options: take the purchase price out of the budget for the recipient, or take the original price of the item out of the budget. If you take the original price out of the budget, you can use the difference to make up elsewhere where you may be lacking, or you can donate the difference to charity.
  • Consider making items rather than purchasing them. If you’re handy, you may be able to save money and give a more meaningful gift.

The Rest of It
The holidays are not all about the gifts. There are also the food, the decorations, the cards, the parties…and these all need budgets, too. As with the gifts, figure out exactly how much you can spend, then divide up the budget among the needs. It’s all about give and take. Can you settle for last year’s decorations so you can spend a little more on that special dessert for Uncle Fred? Can you cut down a little on baking so you can afford that gorgeous wreath for your front door? Determine your priorities and plan accordingly.

Plan Ahead
To make it hurt less next year, start planning ahead now. Set up a Christmas Club or other bank account and have money automatically transferred each week so you’ll have a lump sum available when the holidays hit. Shop sales after the holidays so you can stock up on cards and gift wrap when they’re cheap. And hey, while you’re at it, pick up any great deals you find throughout the year on actual gifts — you’ll be grateful you snagged them when it’s time to figure out next year’s budget!

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