How to create a Christmas financial plan in 6 practical steps

October 21, 2021 Saving

There’s been a long fought love/hate relationship with Christmas spending throughout the decades. And over the years it’s only grown worse for most people – namely because the price of everything keeps rising exponentially.

According to the National Retail Federation we were projected to spend close to $1,000 just on this one holiday in 2020.

Instead of being caught off guard this year it’s time to grab the reins and take control of your Christmas spending. How? By creating a Christmas financial plan.

Create a budget

The math is pretty simple if you’re looking for the most straightforward way to create an easy to view budget:

Income – Expenses = Remaining $$$

But it’s important to note that finding ALL of your expenses is crucial. This needs to include:

  • Subscriptions
  • Monthly memberships
  • All bills and payments

Anything that costs you money needs to be listed as an expense. A great trick to use here is to take your bank and credit card statements and give them a good comb over. Once you’ve done this you know exactly how much extra cash you’re working with and can move onto the next step.

Start saving now

For many people time is of the essence, you want to start saving as soon as possible to hit your Christmas saving goals. Waiting only yields a recipe for debt – since most people will opt for putting the expenses on a credit card and worry about it another day.

While this is a popular option, it’s one that you want to avoid if at all possible. Credit is expensive and a few hundred here and there can cost you way more on the backend.

The credit card mishap

This leads to another very important point in the grand scheme of holiday planning. Credit opt-ins are everywhere. This is good to know so you’re prepared to refuse. No matter where you look, you can almost guarantee every retailer is trying to get you to opt into their credit card. While it may seem like a good idea initially, several things happen with credit:

  • The opt in deal usually isn’t worth it – that 20% off may seem great but when you calculate how much you’re paying in interest over time, that cancels out quickly.
  • It’s easy to overspend – not thinking about a charge until later can be dangerous for your pocket because people tend to buy emotionally and overspend.
  • The credit inquiry – most credit cards require a hard pull on your credit to gain approval. Those take up to two years to leave your credit history. So is it really worth it? Usually the answer is “no”.

Create a prioritized list of people to buy for

Wouldn’t it be nice to buy for each and every person? Of course, but it’s also not practical and we’re all about being practical here. So, for this step you need to be sure you’re prioritizing your gift giving. Maybe do a kids only year this year and talk to your family about not doing a gift exchange for anyone under the age of 18. This alone could potentially cut your list in half.

However, if you do choose to be extra gifty and go all out, align your spending with your list and know a budget for how much to spend on each person.

Plan your travel early

Another big expense that comes with the holidays is Christmas travel plans. Travelling can be fun, going to see family and friends, but it can get pricey quick. Keep a few things in mind;

  • Book plane tickets early
  • Use comparison sites to find the best rates
  • Consider driving if it would be cheaper

Additional Christmas expenses

It’s easy to forget about all that comes with holiday spending and that’s how the bill really racks up. During your holiday planning do not forget about all the miscellaneous spending that commonly happens.

  • Holiday decorations
  • Holiday parties
  • White elephant and secret santa gifts
  • Holiday clothes

Create a meal plan

We can’t forget about the food. Doesn’t it seem like around the holidays there’s always an excess of food and baked goods just lying around? Truly a great time but that food prep can be a pain to your pocket if you forgot to budget for it.

Take the time to map out your means big and small over the holiday season and plan for them early. Maybe this year you try a potluck instead of cooking all by yourself. That way it staves off cost and the headache of preparation.

The bottom line, don’t get caught just spending with no end in sight, create your Christmas financial plan and stick to it. There’s plenty of joy to be had during the holidays even if you’re on a budget.


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