Inside: Discover how to celebrate the holidays without going broke, or into debt with a debt-free holiday budget.
You probably love making people happy and enjoy a night out celebrating with friends. That is, until January when you hear the record scratch sound effect in your head after seeing the credit card bill.
Believe it or not, the holidays are fast approaching. Without a budget in place for the holiday season, overspending is all too easy to do.
A gift list for your family is a great place to start. But it’s just the beginning of creating a holiday budget that won’t leave your wallet empty. So what do you do?
You can create a debt-free holiday budget.
Write down your holiday spending list
The first step in creating your holiday budget is to figure out where exactly your money is going to go.
What are the extras you will be spending money on this holiday season that you normally don’t buy every month or include in your budget? Write these all down. Brainstorm with your family.
Food for special meals
Are you buying extra alcohol or a nice turkey or two this year? How about extra ingredients for making those yummy treats? Write it down.
Chocolate, butter, cream and nuts for treats can really add up, so add those to your list.
The calories add up, too, but they don’t count during the holidays, do they?
Perhaps you are getting a tree or more candles to decorate the house, or you want new lights to string up outside. Make sure if you are getting any of these items that they are included on your list and in your budget.
If you are overflowing in decorations stored away in the garage, then you can move on to the next item.
If you haven’t already budgeted in the cost of tickets or gas for travel, make sure to add that in now so you don’t get an unwelcome surprise. And don’t forget the snacks!
Special clothes or entertainment
Do you have a party you’re attending that requires the type of dress you don’t have in your closet? Or maybe you, ahem, outgrew your old dress. Are you planning to watch a play or take in a good holiday symphonic concert? If so, add these items to your list as well.
Who do you plan to give gifts to? Sit and write down everyone you give some sort of gift to and the amount of money you plan on spending for each:
- Family (significant other, children, parents, nieces, nephews, sisters, brothers, in-laws, etc). Don’t forget the stocking stuffers!
- Co-Workers you normally exchange gifts with
- Service providers such as your hairdresser, postal worker, gardener, etc.
Add all of these gifts up and write down the total.
Can you afford your plans?
Your lists are done, now go grab a drink.
After tallying the cost of all your food, decorations, travel, gifts and anything else holiday related, do you have enough money for it all? If so, great!
If not, then the hard work begins.
Remember, your goal is to have a debt-free holiday. You do not want to go into debt and that is not what your friends and family want.
If what you have on your list costs more than what you can afford to spend this season, then it is time to make some cuts or find more affordable options.
Make a plan
It is time to make a plan on how you will afford all your travel, clothes, food, gifts and decorations. Break down your list into these and any additional parts you have so you can tackle each one in turn.
If you need to buy tickets and haven’t already, you should do so. Prices will most likely only go up at this point and you want to know exactly what you are spending on this front.
Clothes and Entertainment
If you or the kids need something special to wear, see if you can borrow an outfit or check thrift stores and consignment shops. Also check out discount retailers such as Ross or TJ Maxx. We’ve found fancy dresses for just a couple dollars at the thrift store and I’ve found outfits for company parties really cheap at Ross.
As for entertainment, before spending $50 per person on a play or ballet your 6 year old will whine through the entire time and not remember in 2 weeks, maybe take the family out to the ice rink or have a day of sledding instead. Another option is to have a friend watch the children while the adults are out. You can return the favor for your friends as well. Win-win.
If your family isn’t big on Christmas trees, an option is to forgo a tree altogether and make do with a wreath and some garland or other inexpensive decorations. We did this one year after being snowed in and unable to get a tree before the holiday and it was great to not have to water a tree or vacuum needles off the floor.
Other inexpensive decorations and wrapping options can be found at the dollar store. The kids love window clings and some of the cute decorations at the store. It is also a good place to buy inexpensive tissue paper and gift bags, including those for treats.
Saving money on meals is easiest if you make items from scratch rather than buying pre-made. Make sure you are using a rebate app such as Ibotta when getting your groceries. There are even rebates on alcohol available through the app! Nobody needs to know you were able to get a rebate on those bottles of wine you’re serving.
Related post: Ibotta app review
Another idea if you are planning on a large gathering is to invite people over for a potluck. You could do this as a sit-down meal or by setting up a nice buffet, have some decorations up and music playing and let everyone mingle. Everyone contributes, you save money, are less stressed, and can enjoy the company.
Cutting back on gifts is probably the most difficult.
Are there people you can cut from your list? Do you have a friend you hardly ever see anymore? You’ll probably both be relieved to stop exchanging gifts.
With friends, instead of purchased gifts, agree to exchange handmade items, whether it be craft or food. Or agree to have a low-key get-together to just have some fun.
Do you normally buy a dozen gifts for each of your kids? Why? It is that much more clutter you need to deal with. And honestly, look in their rooms. How many of the gifts from previous years are really loved and used? A couple well thought out gifts are much better.
A word to the wise, if the number gifts is being drastically reduced from previous years, sit your kids down and set expectations well ahead of time.
If you still exchange gifts with your siblings, it is probably time to have a chat. We agreed to just focus on the kids and the adults stopped exchanging gifts. We do, however, still exchange family goodies such as a box of treats.
If you have a huge extended family, and they aren’t willing to restrict gift giving to immediate family, you might consider suggesting a secret Santa gift exchange. Everyone still participates and receives a gift, but you are buying for one person rather than many. It will save sooo much money!
For the people remaining on your list, write down what you hope to get each person and start watching prices. If you are planning on buying from Amazon, check the price history on the items at CamelCamelCamel so you know if you are getting a good deal.
Stick with it
Adhere to your budget and make cuts where necessary. Remember, there is no good reason to put yourself into debt with gift giving. You and your bank account will thank you come January.
What have you done to trim expenses to have a debt-free holiday season?