Making Your List, Budgeting It Twice

Credit: Kittisak

I ran out this past weekend to grab some paper towels and cough drops at a local store, and I saw something that would make Dracula, Frankenstein, and even Edward Scissorhands writhe in horror: Christmas merchandise already for sale. I’m as jolly of an elf as they come when it’s December, and I’ll be blaring those catchy Christmas tunes the day after Thanksgiving, but I could have sworn we were still in the middle of October! Yes, next to the Halloween decorations, candy, and costumes were Christmas cards, wrapping paper, and lights. I had planned on saving this post for a few weeks down the road, but the stores have left me no choice. Today, we’re going to look at how to budget for Christmas gifts.

Some say you should keep the Christmas spirit all year long. While I tend to agree with the sentiment, many families take their credit card bills from the holiday season with them into the next year, and I don’t want you to start the new year like that! Even many families who do not overspend around the holidays, or have more than enough assets to smoothly absorb the financial damage taken during the twelve days of Christmas, still don’t have any idea how much Christmas costs. Christmas is expensive! I’m not trying to be the Grinch or Mr. Scrooge, I’m just trying to make sure you have enough cash left over at the end of the holiday season to buy your favorite financial planner a gift, or at least start 2013 in good shape.

In order to spread your Christmas cheer effectively, you need a budget. Figure out how much you can, or want, to spend on Christmas gifts. This amount is totally your call, but I really don’t think you should go into debt for Christmas beyond what you can immediately pay off. Once you have your budget, get some cute Christmas stationary, a nice sheet of notebook paper, download a Christmas list template, install a Christmas list app, or make your own spreadsheet and start listing who all you will be shopping for. Once you’ve done this comes the hard part - putting a dollar amount next to each name, and when you are done, seeing how the sum of your dollar amounts next to names looks versus your originally budgeted amount. If it’s higher, keep tweaking or crossing “naughty” people off your list until you get within your budget. If it’s lower, keep what you have; chances are you forgot someone or will end up spending a little more for “the perfect gift” for someone else anyway.

Now you’ve got a really organized and financially responsible map on how to Christmas shop. Hit all the stores and do your worst, but always take your list with you to keep you on track. Do not deviate from your original budget no matter how great the sale, how pretty the handbag, or how swank the new electronic device. Otherwise, this process really won’t help you.

Feel free to pay with credit cards you already have (Do not open up all those store credit cards for their little, one-time discounts, no matter how tempting), but paying with cash isn’t a bad idea either to help keep your spending in perspective. Also, save your receipts. The receipts will help you reconcile your spending and allow someone on your list to return the argyle socks and T-shirts you got them should something else strike their fancy.

I know these suggestions may seem pretty obvious and fairly simple, but not a lot of people take the time or invest the effort to do this. Trust me; writing up a Christmas list budget can really help the craziness of holiday shopping go a lot smoother and faster, without the overspending.

This is going to sound weird, but Happy Halloween… and Merry Christmas!

-Tom