Create a Holiday Spending Budget to Help Ensure a Happier New Year

Holiday Spending Budget

The holiday season can often be stressful for people who become overwhelmed by shopping and preparation. And for many, it results in financial worries when the time comes to pay the bills. However, with some planning and discipline, the holiday season, and the bills that come afterward, can be more manageable and less overwhelming. But to achieve this, you need to start with the “B” word — budget.

Decide how much you can spend and from where the money will come

Websites like offer free, downloadable documents, like the Holiday Gift Spending Worksheet, that you can use as a basis for your holiday shopping budget. Your first step is to settle on a total dollar amount that you can afford. Don’t plan to put all your holiday expenses on a credit card, or you could end up facing financial challenges come January.

If you do your holiday shopping on credit this year, you can plan for ways to save on repayment. In a 2012 survey by the National Retail Federation, respondents said they expected to spend $749.51 for holiday items (including gifts, decorations, greeting cards, etc.). If that amount is put on a credit card and you only make the minimum payment each month over a longer period like, for example, three years, it will cost you $100s in interest to pay off the charges. Consider the alternative: The same amount paid off over three months will cost only about 10% of that amount in interest, so try to start setting aside money to pay your credit bills off more quickly.

Think beyond gifts when building your budget

If you send out holiday greeting cards, be sure to calculate the cost of the cards plus postage. Add gift wrap, decorations and party supplies to your budget — they can be expensive. Take into account the cost of your favorite holiday meals or the restaurants you go to for special occasions.

Once you have made a list of all your potential individual holiday expenses, go back to the total dollar amount that you decided to spend, and begin to divide it up by each expense. This is where many people realize they will need to cut back in order to stay within their budgets or not set themselves up for a rude awakening after the holidays have passed. There are many ways to cut costs and still keep holiday traditions.

  • Check your budget every few days to be sure you’re on target. Hold to every line item in your budget. If you save on one item, put that savings aside for next year’s shopping versus spending beyond your budget this year.
  • Trim your list of holiday card recipients. One idea is to send cards only to people you don’t see very often. You can also consider e-cards or sending your holiday greetings via social media like Facebook or Pinterest.
  • Reduce the amount you plan to spend on gifts by allocating less money for each gift or by eliminating a few names from your gift list. In the case of the latter, you might give homemade or home-baked items to some people.
  • Create new traditions. Have a family discussion about your gift-giving or party traditions. You may be surprised to learn that others in your family want to scale down their spending too by drawing names, going in on gifts together or hosting more modest dinner celebrations.

Planning for next year’s budget

The most important step in working with your holiday budget is to keep a copy for next year. Make notes about what helped and what didn’t, as well as any ideas that came to you throughout the season. Start putting money away earlier next year — even a small amount from each paycheck will add up and make a real difference.

Holiday spending can be fun if you keep things in perspective and help eliminate some of the post-holiday financial stress by rethinking expectations, planning and staying on top of your budget.


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