6 Steps to Keep You From Blowing the Holiday Budget

Do you start every January with a spending hangover? Follow our six-step guide to avoid one in 2016.


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 2015 forecast, Americans are expected to spend $630.5 billion during November and December. That is a lot of spare change.

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

Step 1: Create a budget

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, 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 of this spending.

Step 2: Get creative

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

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

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 in mid-November, 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

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 an envelope per person if your list is that small.

Holiday-specific spending apps include:

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

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