The sun is shining, the pool is refreshing, and you’re (hopefully) taking time to relax and enjoy your friends and family. 

It seems unnatural to be thinking about reindeer, stockings, and cold weather. However, we all know the dreaded feeling we get when we put off Christmas planning until November. If you start budgeting now, you’ll have the time to be intentional with your finances and relieve that end-of-year stress.

The last thing you want after Christmas is a bunch of credit card bills and regret. Avoid the January blues by following these 4 easy steps to start budgeting for Christmas now.

1. Decide How Much You Can Afford

July is the perfect time to start budgeting for the holidays because you can be rational - and realistic - about what you can afford. Once the advertisements start coming and the hustle and bustle starts, it’s easy to get swept away and overspend. Americans spend an average of $998 on winter holidays (per person) - but what you spend is completely up to you!

Start by looking over what you spent last holiday season. Was it reasonable? Did you go into debt? Would you like to spend less? Are you in a place to give more this year?

Once you have your total cost in mind, divide it by 6 months and see if it is a reasonable amount to add to your monthly budget. If you can’t afford the expenses in all-cash - go back and reevaluate your total amount. 

2. Break Down Your Expenses

Once you’ve decided how much you can afford, it’s time to spread those funds over the different Christmas expenses. 

Gift Giving 

List everyone you’d like to give to, including family, friends, charities, or other local organizations. Decide how much you want to spend on each person/charity. Remember to include Secret Santa gifts at the office, hostess gifts if you typically go to holiday parties, and even items like yearly Christmas cards. Don’t forget to factor in gift wrapping materials as well! 

Talk to your family and friends to see how they would like to approach gift-giving this year. If everyone is feeling the pain of increased expenses, maybe this is a great year to only buy for the children or to draw names and only buy for one family member.

Another great idea - especially for your children - is picking one item from each of these categories: something you need, read, want, wear, and do. This simplifies the gift-giving process and ensures they receive both fun, and practical gifts. Also, remember to utilize second-hand sources for big-ticket items such as thrift stores or online spaces such as Facebook Marketplace. 

Travel 

If you’re planning on traveling for the holidays, whether by plane or car, it’s important to factor those costs into your budget. Prices have increased on tickets, food, hotels, and gas, so keep these increased figures in mind while planning. Remember to shop early for the best prices!

Entertainment

Some yearly activities are simply magical - but it doesn’t mean they are easy on your wallet. Sleigh rides, ballets, light shows, pictures with Santa, etc. are all things to be enjoyed, but you’ll enjoy them even more if you have them planned into your budget. 

Keep these line items organized either on paper or in a digital budgeting app. If you end up finding a gift on sale or scoring cheaper-than-anticipated flights, you can move the excess money to another category. 

3. Shop Early and Utilize Non-Christmas Sales 

Shopping early provides the opportunity for you to utilize non-Christmas shopping sales, be more intentional with your gift ideas, and avoid the crowds. Getting a head start also allows you time to shop around for the best price or even exchange items for a lower price if it goes on sale.

You can save a lot of money on cookware, tech, and home goods July 12th-13th during Prime Day. End-of-season sales can provide savings on items for next summer such as outdoor furniture, grills, swimsuits, etc. Labor Day sales are a great time to buy appliances and mattresses, while Black Friday and Cyber Monday are great for TVs, smart home devices, computers, and tablets. 

Experiences and memories - such as museum memberships, music lessons, and subscription boxes - can also make fantastic gifts. Homemade gifts are also a great way to show intentionality and love, without an expensive price tag. Use this list to brainstorm other great giving ideas. 

4. Save Money and Fill Your Christmas Sinking Fund

Now that you have the total amount you can afford broken down by expense, it’s time to get saving! Take your total and divide it by 6 and try to save that amount each month, or divide it by how many paychecks you will receive between now and the holiday season and set aside a portion of each check. 

Try to find extra money in your current monthly budget, look at some expenses you can cut back on, or even give up entirely to hit your Christmas budget goals. Consider picking up a side hustle for a few months or selling some unwanted items to expedite your savings. 

Your Christmas sinking fund - a lump sum of money you are continually adding to - can be stashed in cash envelopes or just a regular checking account. For funds you’ll need closer to December, put them in a high-yield savings account. These accounts offer higher interest rates - currently around 1% (or higher) as opposed to 0.07% - while keeping your cash completely liquid. 

Wherever you decide to store your sinking fund, be sure to stay organized and stick to the plan! Once the weather starts cooling and the holiday season is upon us, you’ll be able to relax and enjoy yourself without worrying about credit card debt, last-minute shopping, or unplanned expenses. 

Start Budgeting for Christmas and Beyond with Financial Fitness Coaching

At Financial Fitness Coaching, we’d love to help you reach your financial goals, whether it’s saving for a debt-free Christmas or building your small business. We’ll give you the tools, and the coaching you need to feel empowered in your finances. To see how we can help you and your business email me at kristen@financialfitnesscoaching.com or simply schedule a free 20-minute Discovery Call on my calendar.