It’s important to establish a Christmas budget every year to make sure that you don’t overspend.  Check out the following 5 tips for an effective Christmas budget.

1.  Get Real

Your Christmas budget should be within the parameters of an all year budget and should make sense with respect to your current income.  Set your budget goals to avoid debt altogether or to not increase any existing debt.

2.  Document, Display & Update

The budget should be documented either on pen and paper or entered into your computer or electronic device using an app or a spreadsheet.  If it’s simply floating around in your head, it won’t be as effective.

Hang up a printed copy of your budget on the fridge or a place where you can see it easily.   If you have little ones, hang it up in a closet to preserve the Santa mystery.  If your children are older, it’s not a bad idea for them to see the budget displayed as a way to teach them about money management and responsibility.  Note:  This may induce panic in a teen if their wish for the gold iPad Air 2, 128 GB, Wi-Fi + Cellular does not seem to fit in Santa’s budget… but getting real is important for them as well.  

Once you’ve documented and displayed your budget, its important to review it regularly throughout the season.  As you make purchases, update your budget to show how much you have left to spend.  As you know, things don’t always go as planned so this is a great way to keep a tight rein on what’s happening.  Use an app or a spreadsheet to make it easier.

3.  Re-Think Gift Giving

As you create your budget, evaluate your thought patterns on gift giving.  Gifts can be wonderful expressions of love, but they can also be an unnecessary drain on your finances.  Does  the person you are buying for (including yourself) really need you to spend big bucks?  If so, that could be a monster brewing in itself 😉  Many feel guilty if they don’t spend enough money on a gift.  Others feel jipped if they don’t get something ‘good enough.’  The Dogz have an interesting take on all of this in the article “Christmas Is All About…?

Consider these alternative expressions of love that cost less, but have more meaning.

  • Make a contribution in the name of someone to a foundation that they care about like “Friends of Animals.”
  • Get a year round mistletoe for you and your honey.
  • Use TJ Maxx and other discount stores for cool and useful gifts.
  • Buy a great rock n roll, blues & pop cd with inspiring and meaningful lyrics.  Just a little plug for the genius musician that plays with the Rock Pups 😉

It’s best to be honest with the people that you believe may feel slighted with a more inexpensive gift.  Let them know that you still love them just as much but you’re working on a shift into a more responsible financial mode.  They should be understanding.  If not, at least you’ve planted a seed that may help them gain some wisdom and maturity someday.

4.  Navigate Lowest Prices

Stay tuned with both discount stores and sales.  For example, Macy’s has excellent sales throughout the holiday season, but only on certain days.  Make sure you don’t find yourself buying your gifts at a higher price than you would have paid one day later on sale day.  You might look like the  reindeer dog in the header photo who was traumatized when he found out he paid double for his reindeer outfit by not going to a discount store.

5.  Budget Limbo Dance

Do the Budget Limbo Dance.  Picture yourself in Hawaii on the beach artfully maneuvering yourself under the limbo pole.  You are in a competition for the prize of a tasty pineapple.  Use that concept for your budget.  How far under the budget can you go?  If you stay under, buy yourself a fancy fruit you wouldn’t normally buy.  Put the rest of the money towards savings, investments, or paying off debt.  Make it fun.  Compete with your friends. How low can you go?

Merry Christmas & Happy Holidays!!!