How to Not Go Broke Next Christmas (and Yes, You Need to Start Now)

How to Not Go Broke Next Christmas (and Yes, You Need to Start Now)

Anne Momber
Jan 16, 2017

I've definitely been here before: A new year, another January, wondering exactly how I managed to come out of the holidays with a painfully thin wallet and an overspent budget. It's like clockwork. Somewhere in between the end of November and the beginning of January I decide that gifts plus a month-long run of parties, hosting, food and decor are infinitely more important than being responsible with my funds and before you know it I'm looking askance at my budget and promising myself I'll do better next year. Except I don't. Or didn't—until a friend shared a genius holiday budget tip.

Every year, she creates a category in her family's budget for the holidays. That means they decide—in January, when their first fresh paycheck comes in—exactly how much they want to spend on the holidays and divide it up over the course of the year. For example, if I know I'll want to spend $600 on the holidays this year, including food, travel, gifts and decor, I would divide that number by 12 so it's distributed across the whole year and siphon off $50 each month so it's all ready and waiting for me in December. Kind of a no-brainer, but also brilliant at the same time, right? I'll definitely be putting her advice to work this year, starting with these three steps.

Step 1: Set Your Parameters

Your holiday budget can include everything from gifts to travel to cutout cookies. Decide in advance exactly what you want to include in your budget and create a budget that fits. Don't forget to use your past holiday spending habits as a reference—if you have a tendency to drop extra dollars on heaps of gifts, don't expect to change your habits. Instead, consider creating this element of your budget around them.

Step 2: Save Each Month

Once you know your overall budget and holiday savings goals, it's easy to divide that amount by 12 and know exactly how much you want to save each month of the year. It's a little tougher to actually save it. My favorite strategy is to immediately transfer my chosen amount directly into my savings account at the beginning of each month (even better if you can earmark a savings account just for the holidays). That way it's not sitting in my checking account tempting me and I know exactly how much I'm saving toward the upcoming holiday.

Step 3: Savor the Benefits

Just picture it: Holiday season 2017 rolls around and you're not wondering where the money for your plane ticket home is going to come from, or how exactly you're going to buy that extra-special gift for your significant other, or how you'll pull off hosting your annual ugly sweater bash. Instead, you're calmly making purchases and booking travel because you have your very own holiday nest egg sitting in your savings account.

Do you already have a holiday budgeting process that works for you? Or will you be creating your own this year?

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