A financial expert's guide to building a sustainable holiday budget

Find yourself asking "How do I even consider a budget for the family? I don’t even know!" We have the solution for you!

1. Should we ALL be making a holiday budget?

  • No! Only do this if you want to get a handle on your spending. If you want to avoid the credit card hangover in late January. Or, you just want to simplify your life this year.
  • Now, some people don’t need to do a holiday budget. They have a handle on their spending. I don’t do a budget. Or they have so much money that it doesn’t matter what they spend. (Can you picture Lady Gaga drafting one? Hmmm. What should I buy Bradley this year?)
  • I don’t love budgets at any time of year, but especially during the holidays which you’d love to be about abundance – of food, of time and of love. But they can work.

2. What are the steps?

  • 1). Write everything down, for whatever holidays you celebrate (and include New Year’s Eve, if you’ll be doing something for that other than sitting in your PJs and watching the Times Square ball drop on TV and eating 7-layer dip.)
    • Clothing
    • Decor
    • Gifts
    • Hosting
    • Entertainment
    • Travel
    • Charity
    • Buffer
  • 2). Put numbers beside all these things and total it all up.
  • 3). Make some trade-offs.
    • Cut spending: Who is this Aunt Sheila person? What has she done for me lately? What gives you most joy? Cancel the cousin gift exchange. Buy a game instead.
    • Increase income: I could work overtime.

3. How important is accuracy in the budget?

  • Not important. You’re not budgeting for International Space Station.
  • Have a number: It doesn’t even matter what the number is. You could say $1,000 or $10,000. Every family is different – traditions, income, debt etc.
  • Know how you’ll pay for it: Have you been saving for it? Will you do extra shifts at work? Cut back on clothing budget next year.
  • (Little bonus tip: Set up an automatic withdrawal every month to go into a separate bank account so you don’t have to think about how you’ll pay for it next year).

4. How do you stick to the budget?

  • Carry the list with you: Go to stores with a purpose. And write down how much you spent as you go, so you can see where you went over and need to cut back somewhere else.
  • Print out your credit card bills from last year: Nov and Dec. Carry them with you. And look up when your credit balance went back to zero. Was it on March 1st, June 1st?
    • Or, do you still have an outstanding balance? If you do, you already know you need to scale back holiday spending.
  • Prohibit “one for them, one for me”: Or add it into your budget.
  • Know thyself: We have a limited amount of willpower. Know what uses yours up.

5. Sometimes other people in the family have access to the credit card. How do we handle that?

  • Talk about the budget with the family: You’re not going to tell the kids how much you’re spending on their gifts, but you might want to talk about the big picture.
  • Focus on what you buy, not just the price you pay for it: We get so obsessed about saving 40% that we feel like we’ve won the lottery. $100 sweater was only $60. But you still spent $60.
  • Be extra vigilante shopping online: The objective is to make shopping frictionless, reduce the hassle and the pain. This has you spend more because it is easy to lose track.
  • Single best tip: Do you holiday shopping with cash, or with a debit card. You just run out of money. There is no credit card hangover.

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