This article may contain affiliate links. Please read my disclosure for more information.
They can be fun and magical . . . but they can also be stressful and cause hardship. Christmas has become another holiday where retailers go out of their way to make you believe that your family has to have all the latest and greatest tech, gadgets, and toys. We spend hundreds or even thousands every year on gifts for our kids that mostly get broken or forgotten before the new year even starts. And most of us go into debt every single year to make sure no one is disappointed. We don’t have to keep living like that. There is a way to make it through the holidays without stressing over the finances.
The first thing you should consider doing in order to ease the financial burden of the holidays is to stop feeling like you have to buy everything or spend a fortune. Your family will be just fine if they don’t get everything on their wish lists. Aside from that, though, there is something you can do that will completely solve your holiday money troubles. Yep, that’s right, budgeting.
How much should I budget?
Christmas (or any other end-of-the-year holiday you celebrate) is something that comes every single year. You know in January that eventually November will roll around and you’ll be scrambling to get through yet another round of gift giving. Or will you? Not if you take my advice and plan ahead!
This January I want you to do one little thing for me. Add a Holiday Planning category to your budget. You can thank me later. Each month set aside just a little bit and come November (or whenever you’ll be planning) you’ll have all the money you need. The bonus is that, since you won’t be taking out a loan, you’ll actually be saving money on interest!
In my family, we budget a percentage of our income. We have chosen to budget about 1.5% of our gross annual income. That gives us a reasonable amount to spend without going overboard. If you don’t want to mess with percentages (hey, maybe you hate math), there is a simpler method. First, determine the amount of money you’d like to spend on Christmas. The average American family spent just under $900 on gifts in 2017. The average household income in America in 2017 was just under $60,000. So if you’re an average family, then it’s reasonable to budget $900. If you make less or more than that, adjust accordingly.
In order to make sure you have enough to cover your spending plan, you need to start budgeting several months in advance. The easiest time to start is in January. If you set aside $82 every month in January through November, you’ll have $902 for your Christmas shopping in November! No stress, no scrambling, no last-minute shopping (I mean unless you enjoy that…).
We usually spend the most on gifts because we really enjoy that part of Christmas. But your family’s holiday budget should reflect your family’s values. Don’t worry about getting it perfect, just make a plan and adjust it as needed. (In fact, as I was writing this, I realized I forgot to add two gifts to our list…oops!). The only thing you should be careful of is not to go over the amount you have saved! Remember, the goal is to keep from going into debt to pay for Christmas.
If you’re looking for a simple and effective way to keep a budget, check out YNAB (You Need A Budget)! My family has been using their online program for about four years and we love it. YNAB makes it super easy to create and stick to a budget with their easy-to-use app and their Four Rules. If you subscribe using my special referral link we BOTH get one month free! Want to know more about YNAB first, check out my post here! 😊
Have a Merry Christmas and enjoy your debt-free holiday planning!