Even if you absolutely love everything about the holidays, there's one thing you can't deny—they can get stressful, and expensive. No amount of twinkle lights and mulled cider can change the fact that budgeting for the holidays is a challenge—especially when time just sort of sneaks up on you when you're not quite ready. To make your budget work this season, try these steps:
First things first: Determine your holiday spending
Before you can figure out how to move your regular budget around, you need to know how much you need to set aside and estimate your holiday expenses.
Make a list of everyone you're shopping for
Gifts tend to make up the most of your holiday budget, especially if you have a big but close-knit family. Make a list of everyone on your gift list and estimate about how much you want to spend (at most) for each person. That'll give you a good starting point for your holiday budget.
List the rest of your expenses
Once you know who you're buying for, make a list of everything else you might need to spend money on for the holidays—think food, decorations, travel and any other expenses you might have relating to to entertaining throughout the season. Estimate about how much you'll need for everything.
Add everything up
Now for the easy part—once you know all your expenses and have your gift list in order, add up all your estimates to get your budget. The total is how much you'll need to save up.
Divide it by the number of weeks left
Once you have your total budget, divide it by the number of weeks you have left until the holidays—so the amount of time you have to save it up. Say your total is $500, and you have 5 weeks to save it up—that means you'll have to find a way to put aside $100 a week until then in order to cover everything without adding to your debt.
Now: Move your money
You know how much you need to save up, but how do you make it work?
Determine what's flexible and take from there
The first thing you can do is look at your normal household budget and see what you typically spend on weekly. Is there any section you can subtract a little from each week? For example, can you move $10 a week from your grocery budget, and another from $10 from your personal items/toiletries? If so, you're already part of the way there.
Choose an indulgence (or two) to give up
An easy way to cut back on spending that you can re-route into a holiday fund is to temporarily cut out or scale back on indulgences that cost you extra money in your normal routine. For example, if you typically buy your lunch every day or stop for coffee in the morning, try packing your lunch and brewing coffee at home. If you absolutely must indulge sometimes, try treating yourself once a week—the rest of the money you save will go towards the holidays.
Pause savings and emergency fund auto-deposits
If you have auto-deposits set up for a savings account or an emergency fund account, stop them temporarily until you've covered all your holiday costs. Your savings and your emergency fund are important, of course, but taking a short break from adding to them will help you avoid putting all your holiday purchases on a credit card and adding to your overall debt.