The Holiday Budget

Regardless of your religion or family traditions, most of us incur some additional expenses during the months of November and December.  Thanksgiving, Christmas, Chanukah, New Years – there are ways to celebrate without spending, but it is pretty unusual.  A better plan is to admit to the extra spending, figure out how much it will cost, and plan for it.

In really organized years, I’ve done this in January and put aside a little bit of money every month.  Not this year – I’m just getting organized.  I know that I’ve got unusual expenses coming up, and I’ve got to make a plan for them.  Including this weekend’s pay, there are only five more military paychecks until Christmas.

Step one:  figure out where you’ll spend

This part is always shocking to me.  Make a list of every extra expense you might have during the holidays, and estimate its cost.  Your list might include:

  • baking ingredients
  • holiday cards and postage
  • special outfits
  • tape, gift wrap and ribbon
  • Christmas tree and decorations
  • teacher gifts
  • other household decorations
  • tickets to entertainment, such as The Nutcracker
  • family photos
  • dry cleaning for special clothes
  • hostess gifts
  • babysitting
  • gifts for friends
  • charitable donations, including purchases such as Angel Tree presents
  • turkey, ham, roast beef for the main meals
  • extra electricity for those lights
  • family gifts
  • plane tickets or gas for travel
  • postage
  • tips for people who provide you with service throughout the year
  • entertaining food and drink
  • pet boarding or care, if you travel

I’m sure I’ve forgotten some categories, I always do.  However, I think you get the idea – there are a lot of expenses during the holiday season.

Step two:  guesstimate your spending

This part is a little harder, and a little more painful.  It is difficult to be accurate, but do try.  Perhaps you can ask a family member or friend to look at your list and see if it looks reasonable.  Keep in mind that things change from year to year.  For years, I estimated $20 for teacher gifts.  Perhaps, when I had two children in preschool.  Now I have four children in school, with multiple teachers for each child.  I’ve discovered that even with very inexpensive gifts, I’m easily up to $100 for teacher gifts.  Just go down your list and put a semi-realistic number next to it.

Now add them all up.

And breath.

It will be OK.

Step three:  look at your resources

How ever will you pay for all that stuff?  Well, you’ve got a couple of choices.  You could just put it all on your credit card.  Wait – no!  DO NOT DO THAT!  Let’s look at some better options:

  • money culled from the next few paychecks
  • unused gift cards you’ve received as gifts or from making returns
  • a holiday job
  • selling stuff on eBay or Craigslist
  • cashing in credit rewards points for gift cards
  • whatever else you can imagine

Figure out what funding methods will work for your family.  In a year of decluttering, I paid for almost all of Christmas with my eBay sales.  In PCS years, the rewards points from our credit cards is enough to cover gifts.  It can be hard to get a holiday job when your spouse is on active duty and you’ve got kids, but maybe you could swap babysitting with a friend.  Or one of you babysits, one of you gets a holiday job, and you share the income.

However you plan to come up with the money, figure out how much it might be.  Then, compare it to the list of expenses you think you’ll have.  Chances are, there will still be a gap between those numbers.  Which brings us to:

Step four:  creatively cut costs

There are a couple of ways you can do this.  I recommend starting by seeing if you can decrease each expense by 10%.  Ideas:

  • Hire a neighbor to care for your dogs instead of boarding them.  Better yet, swap dog sitting with a friend.
  • Similarly, swap babysitting with friends or neighbors.
  • Consider slightly less expensive teacher gifts.  Truly, it is the thought that counts, as long as it isn’t more useless apple-themed bric-a-brac.
  • Use less ribbon and fancy stuff on your gifts.  Chances are, no one will ever notice.
  • Make fewer batches of sweets.
  • Consider less expensive meats.  Roast beef doesn’t have to be prime rib, and often grocery store honey-baked hams are just as good as the specialty shops.
  • Plan gifts that need to be mailed to lessen the cost of postage.  Heavy, bulky or fragile items are not good choice.  My first year overseas, I had the brilliant idea to send my father a selection of coffee syrups in glass bottles.  Cost me a fortune to mail, and they were broken along the way.   I learned quickly after that.  Also, mail early so that you don’t have to use premium mailing services.

I think you get the idea.  There are ways to trim the budget without ruining the season, but it requires planning and preparation.

Hopefully, you’ve now gotten your expenses and your resources numbers to be fairly similar.  If not, you’ll have to revisit steps three and four until you have some congruence between the two figures.  Once you’ve done that, you are well on your way to a dreamy holiday season that won’t make January a nightmare.

 

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Denise

    This year, WE are on the Dave Ramsey Debt Snowball! I ask of everyone to send a card homemade or take the money They would spend on a gift to us and pay toward a bill so they will not be in debt like we are!

    • KateKashman

      Denise, I am wondering how that is going over with your family? I have some people who would love it, and others who would feel that I am ruining Christmas.

      Congratulations on your way out of debt!

  • Tara

    My husband and I are opening a no fee checking account and putting the money we’ve saved for Christmas into that account. We are only using that account for Christmas related things and once the money is gone, it’s gone!