If you’re like most people, you run up your credit cards during the Christmas season. Hopefully, you don’t still have money on your credit cards from LAST Christmas.
For my wife and I, Christmas is a large expense. We exchange gifts with parents, grandparents, brothers and sisters, and nieces and nephews. We found a system that works really well. I created a spreadsheet with the names of people for whom we buy gifts. I list a dollar amount for each person, and that’s our budget for Christmas. When we buy a gift, I record the total (including tax and shipping, if applicable) into another column, and we make sure we don’t go over the budgeted amount. I also keep a little column for what the items actually were. When Christmas is over, I wipe out all the information, so it’s ready to go for next year.
So, we have this budget we use every year, but how do we avoid going into debt with all the gifts we buy? We save 1/12 of what our budget is every month. You can do this in several ways. You could open a separate account, and automatically transfer 1/12 of your budget into it on the first of every month, or you can use a more holistic approach, and budget all your expenses every month. I’ll cover budgeting more at a later date. This approach eliminates all the stress the holiday season puts on your finances.
If you are one of the millions of people who get stressed out about money this time every year, take the following steps to be able to really enjoy the next Christmas season:
- Create a list of everyone you bought (or are planning on buying) a gift for this year, along with how much you spent (or plan to spend)
- Create a new spreadsheet (you can use Google Docs if you want, it’s free!) with the following columns:
– Budgeted Amount
– Amount Spent
- Fill out the Name and Budgeted Amount columns for each person on your list
- Set up a savings account (call it Christmas)
- Set up an automatic transfer on the first of every month, starting in January, that’s 1/12 of the total amount of what’s in your Budgeted Amount column
Then when next year rolls around, just pull the money back out of your savings, and you will have a stress free Christmas season (well, financially… I can’t speak for the other things that could cause you stress during this season).