Ahhh…. the holiday season! One of the most stressful times of the year; particularly when it concerns money. People would rather spend time with their crazy in-laws (love you guys...who am I kidding they won't read this) than think about how much it will all cost and how they can afford it. However, it doesn’t have to be stressful (at least the money part) if you have a plan and budget in place.
One of my first blog posts I wrote was about different money personalities and how to discuss money with them, specifically budgeting. This is crucial because when you understand your money personality you are better equipped to stay in control of it. In that article I implied that since I am a Financial Planner I am clearly the Attuned or German Shepherd personality, perfectly balanced between spending and saving, always in control and ready for the unexpected. At which point, upon reading that, my husband spit out his wine and asked about my split money personality at Christmas…
So I guess that means I have a confession to make…I am 16% Dolphin. For two months of the year I absolutely forget what a budget is and why I need one. I can’t help it…Christmas has some sort of magical “make me spend money on everything” power. For my husband (who is clearly a Saver or Squirrel personality) this gives him minor strokes each day.
This is what led to him suggesting we talk about our Christmas budget a few days ago to avoid more strokes this year. Now we have been doing this for a few years, probably since our son came along because maternity leave pays almost nothing and we were forced to budget…also our families are enormous and yeah…you can see where I are going here. Either way I protest the Christmas budget every year and every year I lose.
Me: Why must you put a limit on my generosity?
Hubby: Because your generosity will bankrupt us….
Me: Don’t be so dramatic
Hubby: Seriously? You are the one on the floor having a temper tantrum right now…
I am pretty sure that is how the conversation started… Needless to say we now have our Christmas budget done for this year. Since my generosity has a monetary limit… I am going to spread it another way. By sharing my 10 easy steps to a Christmas budget that works!
Make a List of everyone you would like to buy a gift for and I mean everyone. Typically we make a list with our immediate family and some friends, disillusioned with the belief that our list could be that small. We often forget about the co-worker, hairdresser, teacher, daycare providers even the office gift exchange until the last minute. This is where people commonly overspend, so make a list of absolutely everyone.
Allocate a limit to each person. It doesn’t have to be the same limit. Be realistic about amounts. The most common mistake people make is that they underestimate the cost and then they have already set themselves up to fail.
Make another list (can you tell I like lists?) of all the events, social gatherings and parties etc that you will be possibly attending. This is where another common mistake happens, people assume the holidays are a two day event but that clearly isn’t the case. There is typically at least one work function, a friend’s social gathering, kid’s school party and two to four family events.
Allocate money to each event….are you getting scared yet? Again…be realistic, bank on buying a couple extra glasses of wine and don’t forget cab money. Are you bringing wine to the host house? Are you hosting something yourself? Another common mistake is that people grossly underestimate cost here….
Add up both lists separate and then together. You are probably scared now. Relax, I am going to help you get through this. This is the amount you are most likely going to spend over the holiday season.
Remember in my budgeting blog “The Financial Birds and Bees” I talked about the simple formula for budgeting? Income – Expenses = Spending/Saving Money … well you are going to need that right now. Now we are going to figure out if you will have enough to cover your expenses. Here is my imaginary example for visual purposes:
Expected Income between now and Christmas (approx. 6 weeks): $6,000.00
Expected Expenses between now and Christmas (needed to live): $4,500.00
Expected Spending Cash for the holiday season: $1,500.00
Now compare that total with what you had hoped to spend. Does it match? If it does, give yourself a pat on the back and skip ahead to number Eight, if it doesn’t read on.
Amounts don’t match? Re-evaluate your lists. This is where you need to prioritize what is most important to you. Would you rather participate in social events or give people gifts? Scale back your lists until your budget and actual spending match.
This is not easy but it needs to be done. Do you really need to attend your best friend’s brother’s cousin in law’s cocktail party? Do you really need to buy gifts for every kid in your child’s class? Look at your limits as well, can you scale back there? Do you need to spend $500.00 on your kid or spouse? Can you make baskets for couples instead of individual gifts? Do you even need to buy gifts; maybe you are crafty and can make items as well?
Time and plan your events and spending to your pay periods. Another mistake people make is doing one giant shopping trip, putting it all on their credit card because who has $1000.00 just sitting in their bank accounts and possibly forgetting to pay it off. If you get paid bi-weekly that $1500.00 over six weeks is $500.00 every two weeks so spend accordingly. Do you see that you have 3 events in the same weekend but then nothing for 3 weeks, put extra aside.
Hold yourself accountable. When you purchase something write down what you actually spent and cross their name off the list so you don’t accidentally buy for them twice. Have a spouse or partner? Split the list and only buy for those on your list, this will also help reduce the chance of duplication. Communication is key when it comes to partners and money. If you aren’t talking about it then you are both in the dark and more likely to overspend.
Relax. Congratulate yourself on once again putting yourself in control of your money instead of letting if have control over you. Remember that money is a tool to reach a goal and not the goal itself.
Too often we stress over the monetary aspect of the holiday season. We place ourselves in a cycle of comparison; believing that we need to spend so much and attend all the events to be valued and viewed as successful. However when was the last time you looked at a gift you received from someone and thought “I saw that at XY store and I know they only spent $20.00…”? You wouldn't, so why assume others will do that with your gift. It is the act of giving that people value not the monetary value of the gift.
Do you have a Christmas budget? What is your biggest money struggle at this time of year? Share it in the comment section below!!
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