How to Create a Holiday Budget (That Can Keep You Out of Debt!)

Think of one word that comes to mind when you think of holiday shopping. It’s probably budgeting, right? Okay, so maybe it’s not the first word that comes to mind—but it should! Last year, 44% of Americans racked up more than $1000 in holiday shopping debt, and there’s no sign that the trend will slow this year. What can you do about this impending wave of money-spending holiday temptation of a season? Budgeting. Holiday budgeting is your best defense against overspending. Here are three steps to creating a fool-proof holiday budget.

Start Your Holiday Budget Sooner Than Later

Before you even start scrolling for deals online, you need to create a rough budget. You don’t need to be exact to the penny, but give yourself a rough picture of your financial plan for the next few months. Start by planning your budget for the next few months. Consider any savings, income, and credit limits (though we encourage you to only spend your own money, and not credit that is loaned to you).

Once you have that estimate, consider how much you’re actually able to spend on your holiday season. Think about how much you’ve spent in years past, take stock of what you already have, and consider your goals for the season.

Finally, set your holiday budget minimum and build in a budget cap just in case you’re not lucky on deals.

It’s hard to start here first (especially when you haven’t figured out what you’re gifting everyone yet), but this is the groundwork to ensure you stay on track this year.

Create A Holiday Shopping List

Even if your budget isn’t final, you’re now ready to start your master holiday shopping list! List out everything you’re gifting, cooking, baking, and decorating. Once you have your list, start estimating the expenses. You should plan to spend no more than your holiday budget minimum.

Think of your holiday shopping list like your weekly grocery list. Before you start shopping, write down your list of what you plan to purchase there—and stick to that list. Just like a grocery list can help you save money each week, keeping a holiday shopping list can help you save money.

Stay Strong and Keep to Your Holiday Shopping Budget

Now here’s the really hard part. Stay on track!

Creating your holiday shopping list becomes important because your list is meant to keep you on track. Once you enter a site or store, focus on making the purchases from your list. Don’t get distracted by deals for things you don’t need.

Use your list to keep track of your spending, and adjust if you under or overspend on something. If you overspend for one gift, make sure you spend a little less than you had planned on another.

If something costs too much, consider your options. You can:

  1. Try to find the gift elsewhere for less money
  2. Get inspired and decide on a new (less expensive) gift
  3. Buy it, and figure out how to spend less on something else.

Staying on track is the easiest way to ensure you don’t end up with debt at the end of the season. Follow these three steps to creating a holiday budget, and you’ll have the tools to face this year’s shopping insanity without landing in debt. Now, get your Santa hat on, light some candles, hang some lights and go forth to be disciplined holiday budgeters.