Tuesday, October 23, 2012

Making a Holiday Budget - Part 1

This will be a two-part post about making your holiday budget. Yesterday we discussed making a list of who you need to buy presents for and what you want to buy them. Today we're going to discuss setting a budget for how much money you will spend on gifts... and sticking to that budget!

So you've made your list - you have names of family, friends, neighbors, teachers, etc that you'll be buying presents for this year. Now I want you to look at that list and ask yourself two questions:

1. Did you buy a present for this person last year?

2. Did they give you a present in return last year?

The reason I tell you to ask these two questions is that many times we get in a routine of giving certain people gifts around the holidays; it's become a ritual, but you don't know why. Maybe it's a friend that you're not really in touch with any more. Maybe it's a neighbor that you've never really been close to. If this person didn't give you a present last year for the holidays, it means they are OK with not exchanging gifts and they would probably actually prefer if you didn't give them a gift this year.

I have an acquaintance that gives me a gift every year, even though I've told this person we do not need to exchange gifts. In the past I've given them a token gift in return, because I've felt obligated, but last year I finally decided I was going to stop. I wanted to send the message that I really meant it when I said I didn't feel we needed to exchange gifts any more. It just isn't necessary for the type of friendship that we have.

So listen to the messages that people are trying to send you. If someone didn't give you a gift last year and they are currently on your list, cross them off. Chances are you were buying them something they probably weren't going to use, so it is a waste of money all around.

Next I want you to look at the people on your list that are teachers, school bus drivers, mailmen, etc. What do you have written down as ideas for presents next to their names? Your gifts to these people do not need to be extravagant. I would recommend either giving something really practical or something edible. Don't buy them something just for the sake of buying them something, it's a waste of money.

Let's say you have two teachers, one mailman and two bus drivers to buy for this year. You could make quite a few dozen cookies for around $10, buy a festive plate at the dollar store, split up the cookies five ways and have a nice gift for each of them for only a few dollars per gift. Make sure to wrap up the plate of cookies nicely in cellophane with a festive bow - great presentation can make any gift look impressive!

Now lastly, I want you to look at the rest of the people on your list - probably your family and close friends. What ideas do you have written down next to their names? Are they realistic presents for your current financial situation? I want you to look at your finances and determine exactly how much you can afford to spend on each person.

Here's what I recommend doing: look to see if you have any money left over in October and how much you can budget for holiday gifts in both November and December. Let's say you have $50 left over in October and you can budget $100 in each November and December. This means you'll have $250 to spend on gifts this year.

Now continue backing in to this budget - write down how much you want to spend for each person on your list. Keep in mind, your budget for each person may vary. You may decide to spend more money on your parents than you do on your siblings. That will be up to you. But your dollar amount that you plan to spend for each person on your list needs to total to no more than that initial number ($250 in our example). Once you have your budget per person figured out, talk it over with your spouse. Agree on the numbers. This will be key to sticking to your holiday budget.

As you look at the list of family and friends to buy for, is it a really long list? Did you find that you couldn't afford to spend as much as you'd like on each person? Do you buy for a ton of nieces and nephews or cousins? If that is the case, I would recommend you suggest to that grouping of family that you do a secret santa or pull names and everyone just buys for one person. By doing that you may be able to spend more on that one person than you would have if you had to buy for everyone. This way everyone gets one nicer gift instead of a bunch of smaller gifts when budgets are spread thin.

And remember, the budget you set for each person is a goal to stay below, it's not a goal to hit. So for example, your budget for your sister is $50 and you want to buy her a set of Alex and Ani bracelets that will run about $50. But then you see a great deal on Holidays for Less on Alex and Ani bracelets and you get them for $35! This doesn't mean that you then have to spend another $15 on your sister so that you spend $50 on her. You're still giving her a $50 item. You can then allocate that $15 to another area of your holiday budget, if needed, or just save it!

Tomorrow we'll talk about everything else you'll need to factor in to your holiday budget!

No comments:

Post a Comment