How do you budget for Christmas? When should you start?
One minute you’re singing about the most wonderful time of the year and the next, you’re slapped with a credit card bill that knocks the wind out of you.
This season is about celebrating and giving so don’t let financial worries overshadow it.
I’m in a few different budgeting Facebook groups and a questions that undoubtedly pops up a few times a week is how much everyone is/should spend on Christmas. The answers vary so widely from nothing to thousands of dollars.
A study from the National Retail Federation shows that last year the average spent on the holidays was $1,007 and that number is increasing each year.
Kirk Jewell from Global Financial Services says, “a good rule of thumb is to spend no more than 1 percent of your overall income on the holidays.” If you make $100k/year, that means $1,000.
According to Census.gov, the median household income is $62,000. If we apply the 1% rule, that would mean $620 is the figure to spend for the holidays.
BUT, that doesn’t mean that’s what you have to spend. If you are currently working your way out of debt or you are saving for your emergency fund, 1% may be a little tough to swing.
- Related: How to Save Money for Christmas
In the same way, if you are in a financial place where you can spend a little more, that’s okay, too. The goal is to not go into debt.
There is nothing wrong with spending money, especially when you’ve budgeted for it.
1. Start Early
The best thing to do is to start saving early. Like January early. Figure out how much you anticipate to spend at Christmas time, then divide that by 12. That is how much you should be putting away each month.
But if you didn’t start early, no need to fret. Try these 10 Christmas side hustles that make money TODAY.
2. See how much you can spend
Check your current financial status to see how much you can spend on Christmas this year without going into debt. If you have $0.64 to your name, you may want to go the DIY route. Some of the best gifts are simple and cost hardly anything to make.
Gifts that are free to give:
- homemade coupons
- back massage
- song
- poem
- drawing
- uninterrupted free time
- scrapbook
- a clean house
On the flip side, if you have an excess of cash burning a hole in your Christmas envelope, now is the time to spend it without guilt because you’ve been saving it!
3. Set your Christmas Budget
Now that you’ve checked your bank account or your Christmas cash envelope to see how much you have available, it’s time to set your budget.
With the ‘rules of thumb’ in mind, how much do you feel comfortable spending?
Set your budget and track it. Write down who you plan on buying for, what gift you’re wanting to purchase and how much you want to spend. Then go back and track what you’ve actually spent. I’ve created a budget tracker specifically for this reason and you can have it for FREE!
Sign up right here to get your free budget!
4. Add up all Christmas expenses
When it comes to budgeting for Christmas, we know we need to budget for gifts. But doing only that is a very easy mistake to make [speaking from experience]. That’s not the only expense this wonderful holiday season brings with it.
Not only should you add up gifts, but if these apply to you, make sure to include: Christmas PJs, Christmas cards, stamps, photographer for taking family photos, gifts for family, friends, co-workers, gift wrapping supplies, stockings + stuffers, activities, Christmas tree, decorations, travel, packaging, etc.
If you have family that lives a ways away and you send them gifts, don’t forget to budget for postage.
Are you wondering how you are going to afford Christmas this year? If you are just now starting, check out my post where I give you ideas on how to save money for Christmas this year.
If you’ve already pinched all the pennies you can, try these side hustles to make money. Lots of stores are hiring seasonal work to cover their busiest time of the year. Or you can freelance!
Next year, start budgeting for Christmas early.
While the holiday season is still fresh in your mind, add up everything you have spent over this holiday season and divide that by 12. That is how much you should budget for Christmas each month.
Looking for more ways to save money for Christmas? Try these:
- 18 Ways to Stay Warm Without Turning up the Heat
- Check Your Subscriptions | Money Saving Challenge
- 4 Money Saving Challenges you can Start Today
- Stop Buying Coffee | Money Saving Challenge
- Save Money by ReducingYour Water Usage
Find this helpful? Share it with a friend!
Now it’s your turn: let me know down in the comments how you stay organized with your Christmas budget.
