Whether you’re ready or not, the holidays are here. Before you start making your lists and checking them twice, there’s one step that comes first: deciding how to budget for the holidays. (You totally knew I was going to say that.)
Gifts are the obvious holiday expense, but they’re not the only one. Decorations, food for potlucks, charitable donations, Secret Santa gifts and the big holiday meal can easily turn into December budget-busters if you haven’t planned for them. Taking time in November to plan for December saves you time and money all season. And who doesn’t need more of both of those?
Here’s what I share with clients.
Get most of your shopping done by December 1
This way you won’t be tempted to wait until the last minute and buy things willy nilly. You’ll be far more intentional with your purchases if you shop before December hits and your calendar fills up. Nobody wants to be throwing things into an Amazon cart four days before Christmas and paying through the nose for expedited shipping.
Set an amount for each person on your list
If you’re the main shopper in your family, this may be a long list. Kids, your spouse, parents, siblings, nieces and nephews, friends. Write down each person, how much you plan to spend, and how much you’ve spent so far. That gives you the full picture: how much is gone, who’s still waiting, and who already has one too many presents.
Don’t forget the people outside your family
There are plenty of other important people in your life (or your kids’ lives) who tend to be last-minute purchases because they’re easy to forget. Teachers, mail carriers, coworkers, dog walkers. These usually aren’t elaborate gifts, but when they’re not in the plan, they add up.
A gift idea for anyone stressed about money
Some people on your list are hard to shop for. And some of them have told you, maybe more than once, that money stresses them out. The friend who just started a new job. The couple who just got married. The sibling who keeps saying they’ll get organized after the holidays.
For them, SpendFirst makes a great gift. It’s my book, and it comes in paperback, hardcover and Kindle. It walks through the whole method one paycheck at a time, so they can open it in January and plan their very next payday. If you’re giving a print copy, write a note inside the cover about what you hope it makes easier for them.
Giving gifts to clients this year? The SpendFirst 10-pack makes it easy to give a copy to each of them.
Plan to deck your halls
One of the great things about the season is all the merriment that comes with it. Decorations and parties are never in short supply. What do you need for the holiday meal? How much are you planning for stockings? Are you buying a 10 ft Douglas fir this year? Got a fancy work party that needs a new outfit? Put that in the plan too.
If nothing specific comes to mind, set a little extra aside anyway. Something always pops up.
Fund it from the paychecks you have left
Once you have your holiday total, count the paychecks between now and the last holiday on your list. Divide the total by that number. That’s how much to set aside from each paycheck as SpendFuture, in its own account, so gifts and groceries don’t come out of the same pile.
Keeping it separate from your SpendFreely money is what keeps December from eating January. When the holiday account is empty, you know you’re done, and your everyday spending money is still there for everyday life.
If the number doesn’t fit this year, that’s useful too. It tells you exactly where to start for next year.
Look ahead
Once the holidays are over, most people don’t want to think about them for at least another ten months. I challenge you to do it much sooner. The time to start planning for next year’s holidays is January 2nd.
Take an hour or two to plan out the full year: holidays, birthdays, anniversaries, baby showers, graduations, weddings and any other gifts you buy. Then add the ones that sneak up on you. The Easter candy you grab at Target in March. Halloween candy and costumes. The graduation in June that you somehow forgot was coming. If you don’t know exactly what something will cost, estimate high. It’s better to have money left over than to scramble.
Once you have the grand total for the year, divide it by 12. That’s your monthly amount. Then set it aside the way that fits your rhythm: a little from every paycheck, or all at once on one day each month, like it has its own due date. The Year Ahead planner walks you through it. When a gift comes up, the money is already waiting in your gift account, no credit card needed. These are expenses that don’t happen every month, and they’re a lot lighter when every paycheck carries a little of them.
And you’ll be that much further ahead when November rolls around next year.
Happy holidays! Now get to planning.
Map every holiday, birthday and gift on next year’s calendar, and see how much to set aside from each paycheck.
Planning for the expenses that don’t happen every month, holidays included, is Chapter 6 of SpendFirst. It also makes a great gift.
