The Good Life on a Budget

• Posted by JvW on October 20th, 2009 filed in Budget

I know, it seems really early to talk about Christmas. And as far as Christmas decorations, Christmas carols and Christmas trees at Home Depot go, it is too early. But for Christmas budgeting, there’s no time like the present. (pun intended)

There are just under 10 weeks until Christmas. Whenever I say that out loud, people tell me, “Don’t SAY that! I’m not ready for Christmas.” Well, hate to break it to you, sweetie, but Christmas is coming whether you’re ready or not. So let’s get ready!

1. Decide how much you want to spend. This has to go first. It’s so easy to get carried away just buying one more thing and before you know it, you’ve got bills until July. Take a good, hard look at your budget, cash flow & bank accounts and decide how much you can realistically allocate to Christmas gifts.
2. Make a list of who you exchange gifts with. Once you have your list, check it twice. Do you really need to swap presents with everyone you’ve ever met? Perhaps you can cut back to a card or a homemade treat. I’m not saying to cut out the important people in your life, but think twice about coworkers, service providers, etc. before automatically buying more stuff just to have something to give them.
3. Allocate the funds. Once you have your total, distribute it among the people you’re exchanging gifts with. This might take a little time. One trick I always use is to always allocate the same to people who are related to us similarly. For example, all four parents (mine and my husbands) have the same budget. No playing favorites.
4. Start putting money aside. Unless, of course, you have already saved the money you need. Figure out how many paychecks you have between now and December 20 (let’s be realistic, you don’t want to be cashing a check to buy presents on Christmas Eve). Divide your total budget by the number of paychecks. Each paycheck, take that amount and put it aside - in another bank account, in an envelope, whatever works. Or if you’re very disciplined, know how much you have to spend and pay with a credit card, then pay it off using the budgeted funds.
5. The fun part: shopping! My goal every Christmas is to buy as much as possible using my budget. I only buy things I know people will like, but I work to get great deals on them so I can maximize my spending power. Most things I get are on sale, so the actual value (MSRP) of the items people receive is much greater than my budget. That way I don’t feel like I’m stiffing anyone.

This year my budget barely changed from last year. I made a few tweaks here and there, the most significant of which was increasing my nephew’s budget (last year he was still in the womb). Once you have done this exercise, every year after it’s simple - and you get to pretty much skip to the fun part!