A 6-Step Plan for a Holiday You Can Afford


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It is possible to do the holidays -- and be generous -- without busting your budget. Follow this plan and avoid a financial hangover in the new year.

Each year, millions of holiday shoppers set a budget for how much they plan to buy during this most festive time of year. But how much do they really spend?

According to the National Retail Federation’s 2016 forecast, Americans are expected to spend $655.8 billion — 3.6 percent more than last year — during November and December. That is a lot of spare change.

If you struggle to keep your spending under control, check out this six-step guide on avoiding the temptation to go overboard this holiday season.

Step 1: Create a budget

Stanislav Vinogradov / Shutterstock.comStanislav Vinogradov / Shutterstock.com

Many shoppers skip a written budget, opting instead for a hazy idea of what they can afford.

Let’s be clear: A hazy idea is not a budget.

Within the next week, sit down — with your significant other if you share the bills — and write down your holiday budget. To do this, you need to:

  • Brainstorm every gift you need to buy. A common mistake is leaving out all of the little gifts that can add up. They include the “white elephant” gift for the family party, gifts your bosses, colleagues, customers and clients, the “Secret Santa” exchange at the office party, and all those tips for service workers.
  • Write down all holiday food expenses. Your normal grocery budget isn’t likely to include things like the fixings for a family feast or ingredients for dozens of cookies.
  • Assign a dollar amount to every line item. Every person and event needs a specific budgeted amount.

Once you add it all up, decide if you can afford it. If not, pare down or eliminate some spending.

Step 2: Get creative

SAQUIZETA / Shutterstock.comSAQUIZETA / Shutterstock.com

If you don’t want to eliminate people from your gift list, it’s time to get creative. Consider giving gifts that may cost you more in time than money.

Crafty folks have all sorts of options, from knitting scarves to creating photo scrapbooks. Go online and find instructions for inexpensive handmade gifts such as:

  • Baking mixes
  • Bath salts
  • Decorated bookmarks
  • Painted picture frames
  • Rice bag warmers
  • Coasters

Don’t overlook other types of gifts. Your great-uncle may not need another knickknack, but he might need someone to rake the lawn. Your grandma might appreciate the simple gift of your company for an afternoon.

For gifts of time or service, create a decorative homemade gift certificate or coupon to place in a card.

Step 3: Inventory what you have

Uber Images / Shutterstock.comUber Images / Shutterstock.com

Some people are appalled at the idea of regifting, but there’s no good reason to keep things you don’t use or like.

Step 3 is about more than regifting, though. It’s about looking through the house for anything that could be used to reduce your holiday budget.

Maybe you went a little wild during the last Yankee Candle sale and have a stockpile of scented wax in the closet. Perhaps you can redeem credit card rewards points for gift cards or merchandise.

Depending on your family dynamics or the age of the recipient, you may even be able to gift gently used items. In fact, that may be the preferred way to find an item for white elephant exchanges and the like.

Step 4: Start now

Maksim Shmeljov / Shutterstock.comMaksim Shmeljov / Shutterstock.com

Waiting until the last minute is a surefire way to blow your budget. Shopping on Dec. 23 can make you desperate to buy the first thing you see.

By starting before Black Friday, you’ll have plenty of time to watch for sales and coupons for the gifts you need. Plus, the crowds will be more manageable.

Starting early also gives you time to make some homemade gifts.

Step 5: Track your money as you spend it

kikovic / Shutterstock.comkikovic / Shutterstock.com

Holiday spending can add up quickly, so you need to track the money you spend from the moment it leaves your wallet.

A smartphone app may be the best way to ensure you’ll always have your budget with you. Goodbudget lets you set up 20 envelopes. For the holidays, you could use one envelope per person if your list is that small.

Holiday-specific spending apps also include:

If you prefer, an old-fashioned pen-and-paper tracking system also works.

Step 6: Stop shopping

AlexMaster / Shutterstock.comAlexMaster / Shutterstock.com

This final step may be the most difficult for some.

Once you have found the right gift, purchased it and crossed the person off your list, stop shopping for him or her. Stop looking at ads and stop browsing displays with that person in mind. When your entire list is complete, stop shopping altogether.

Unless you went under budget on your previous purchases, any more buying is liable to break your piggy bank.

If you do see something you absolutely must buy for someone already crossed off your list, return the item you previously bought instead of spending more money on that one person.

How do you do each holiday season? Do you stay on target, or always find yourself spending more than expected? Share your experience with us on Facebook.

Stacy Johnson

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