Today is day three in our two-week Christmas series: Organizing Your Way to a Simple Christmas.
I don’t offer much financial advice here at Organizing Your Way, and I don’t plan to make that my focus anytime soon, but as we start our Christmas series this week, I want to offer one simple piece of advice: Do not use credit cards to finance your Christmas.
I know you love your children very much and you want them to have an amazing, spectacular Christmas. And I know your extended family pressures you into elaborate gift exchanges. And I know that you hate the idea that anyone would think of you as “poor” if you don’t keep up with the rest of them.
I know all that, but is it really worth the stress of credit card bills that take months to pay off? Is it worth the worry and strain on your marriage? If it is worth it to you, there’s really nothing else I can say, but if you’re overspending to keep up with the expectations of others and you regret it every year, please, please reconsider.
On a brighter note, 2009 is probably the perfect time to reconsider your holiday spending habits. Everyone knows someone who has been touched by the recession, and millions of households are cutting their expenses in the face of the economic woes of the past 18 months. This could be your year to turn over a new leaf when it comes to Christmas gifts — with less extravagant gifts and more handmade gifts from the heart — and no one will bat an eye!
Creating Your Budget
The first step to planning for Christmas — because it affects nearly every other topic we’ll cover — is to sketch a realistic budget. You need to take a look at your finances and decide how much money you can set aside for Christmas without relying on credit cards. If you’ve been saving money in a Christmas fund all year, you probably already have a good idea of what your total budget will be. If not, sit down with a calendar, a calculator and your monthly budget and sketch out a Christmas budget.
It’s important to do this step before you start dreaming about gift ideas, new decor for your home and events you want to attend with your family because it’s much easier to make your spending fit within your budget than it is to stretch your budget to fit your spending.
If you’re not living on a tight budget and have plenty in savings, you can plan your Christmas budget from the opposite perspective, writing down the amount you want to spend in each category and coming up with a total number that way. However, it’s still important to have a written budget so that you don’t get to the end of the Christmas season only to look back and realize you spent way more than you intended.
Increase Your Budget
The good news is that if you’re discouraged by the final number, there’s still time to pad the budget. Begin decluttering your home, keeping an eye out for items that can be sold on eBay or repurposed into thoughtful handmade gifts. If you’re a talented seamstress or baker, you may be able to earn money by selling handmade gifts or baked goods. Or you may decide to pick up a seasonal retail job. If you are looking for extra money for the holidays, there are dozens of options for you to consider, but you need to make that your priority this week because at some point you will run out of time.
Allocate Your Budget
Once you have your realistic budget written down, begin making decisions about how you will spend it. Depending on your priorities and the amount of your budget, you may find that the bulk of your budget goes towards supplies for baking or handmade gifts. If you’ve been saving all year, you might have more freedom in your spending or be able to set some aside for home decor or entertaining as well.
Be sure to think through all possible expenditures — such as meals for the church’s potluck, baked goods for your neighbors, wrapping paper and bows and so on — so that you’re not surprised by it later in the planning process. (I’ve suggested many additional spending categories on the budget worksheet linked at the end of this article.)
The key is to take the amount that you can realistically expect to have and come up with a spending plan so that you don’t end up relying on credit cards. If you’re brainstorming additional income ideas, add those amounts to the budget in parentheses so that you have a spending plan with or without the extra cash.
Today’s task: Use the Christmas Budget Worksheet to sketch out a realistic spending plan. Ignoring the budget won’t make things easier, so please don’t skip this step!
Does the idea of writing down your Christmas budget stress you out? Have you been saving all year? Will you be scaling back your Christmas this year?