Effective Holiday Budget: Easy as 1-2-3

The holidays are upon us! COVID-19 is still a thing but it also gives us an excuse to take a break from the holiday excess of the past. Everyone on a tight budget has a built in excuse this year. Just tell family and friends you are taking the holidays easy. This is so important. Even for us old folks, peer pressure is real and can make us do things like overspend on the holidays. Crowd sizes are limited therefore large expensive family gatherings are limited too. As someone who has cooking dinner for over 15 people at time in the past, it can be expensive. It is not happening this year. Who could hold that against you in this year of all years? So, I’m downsizing for the holidays and you should too.  But I’m not canceling the holidays either.  Here’s how to make an effective holiday budget.

Lists are so important for me. When I sit down at my desk in the morning, I make a list of the tasks that I need accomplished for the day. I list the important stuff first so that I stay on point and don’t get distracted.  Fellow list-makers, have you ever put an easy task on your list just so you can cross it out? So, satisfying! Start your list by thinking about what you spent your money on last year for the holidays. You might make separate lists for food, decorations, and gifts or any other holiday expenses. List in any order at all because you are going to reorganize it later. For gifts, who are you buying for this year? For food, who are you feeding this year? Really brainstorm on this one. Does your list look alarmingly long? No worries, because you are going to have priorities.

Okay, now that you have your number, it is time to make those priority decisions. Remake your list to reflect the most important expenses down to the least important expenses. For instance, you may have your children’s Christmas gifts listed ahead of a gift for the mailman. And, maybe you don’t which is fine. Hey, I’m not here to judge! Also, you absolutely can prioritize your list. Some items may be equal in your mind so just list them close together. What is more important to you, your kid’s teacher’s gift or great aunt Shirley’s gift? You do not need to be perfect. Just get it down on paper first. The editing comes later.

How much money do you have to spend and how much money do you want to spend? If you are like me, you want to spend as little as possible. Great! But you still need to put a number on it. Maybe $500 is your number. Go down your list and start assigning a dollar amount to each item. Did you run out of money before you were done with the list? Okay, go back and edit the amounts on your list until the dollars total up to $500 or less. Keep in mind that many items require very low dollar amounts or no money at all. Outside of immediate family, baked goods are always a hit at holiday gift.

If you’re struggling to downsize your holiday budget, baked goods make the best gifts. My wife and I have baked more and more nut rolls for gifts. This does take up a lot of time but the cost is very low and the more we make at once, the more we can keep the cost down. Recycling (re-gifting) is fun as well. We have joined a gift exchange with our group of friends where the only rule is that the gifts have to be re-gifted. In other words, we can not spend any money on the gift. We have to give something from our own. We have actually re-gifted old Christmas gifts that we never used. Examples include holiday bowls, chip dip stations and beer signs. It is so much fun and our little group looks forward to it every year.

Make the most of your holidays with a little holiday budget, a lot of revising and a positive attitude.

For more holiday savings tips, check out our popular Money Minute blog:

5 Keys to a Very Frugal Christmas

Creating a Plan for Holiday Spending