Making a Christmas Budget

It may seem too early to establish a Christmas budget, but planning early and spreading out the spending can add up to holiday savings.

Although making a Christmas budget is frequently suggested to save money during the holidays, step by step instructions are not easy to find - until now.

Step 1: Write it down.

Don't just tell yourself you'll stick to a budget this year. Write it down. This will greatly increase your ability to follow your own good intentions.

Make a list of all the people you will purchase a gift for. You may need to add a few extra spaces for "incidental gift swaps" to reduce the number of surprise gift-buying incidences.

Step 2: Give each person a value.

This may sound harsh, but in order to make a present budget work, you will have to know how much you want to spend on each gift.

Write down the dollar amount you can feasibly spend on each person. Be as accurate as possible. At this point, also add in any charitable donations you regularly make at the holidays.

Once you've settled on an amount for each person on your list, consider giving each of them gift cards in that amount. Gift cards are quickly losing their "I'm too lazy and cheap to get you a gift" reputation. And it will be hard to go over your dollar amount when buying a gift card.

Step 3: Add it up.

Add up the total dollar amount for present buying and charitable donations. Divide this number by the number of pay periods left before Christmas, or if you prefer, by the number of weeks or months left until the big day. Doing so will give you a spending budget, and a present-buying time line to use, which can help relieve the stress of holiday shopping.

Step 4: Write it down again.

As you purchase presents for each person on your budget, write down the actual dollar amount spent on that person. That will allow for adjustments to spending amounts later, if you find yourself ready to blow past your budget total.

Step 5: Have a back up plan that doesn't include a credit card.

Turning to a credit card during the holidays is like having seconds for many people. You don't want to do it, but it's too hard not to cave in to the pressure.

This year, instead of turning to credit if you tromp all over your budget, have a backup plan. Look for ways to decrease spending without leaving anyone out.

Ask friends who normally swap gifts if a potluck dinner would be a nice change of pace. Everyone brings a dish, and this is their gift to everyone else.

Think of something you can do for someone else. Offer to mow your parents' lawn for the summer, or a grandparent's lawn. Do housecleaning once a month for an older aunt who doesn't get around as well as she used to. Give friends and relatives who are parents free baby sitting "gift certificates". Time is precious to everyone, and giving yours will be appreciated.

In the end, sticking to a budget is a lot like sticking to a diet. You have to follow the rules if you want it to work. The holidays are supposed to be joyful, not filled with stress about how you can afford to recognize everyone you care about with a gift.