On my update post, Sherri asked if we had a Christmas budget and if we stuck to it. That’s a great question.
A lot is said in the personal finance world about creating a budget. I think budgets are an important tool to use to see where you stand in relation to your income and spending. It can also be valuable for planning.
In a strict sense, we do not budget. I’ve attempted to make a budget, but it goes against my way of thinking and it becomes more stressful than useful. Instead, I have certain expectations in my head of how much I’d like to be spending per month on certain things. That changes in relation to our cash flow (which I project months in advance in Quicken).
For our Christmas spending, I usually set an amount in my head and keep a tally going in Quicken. This year has been difficult because I have been busy lately and I haven’t entered the detail of our spending in Quicken. The only thing I have entered is the total amount spent at each store so I can keep track of balances. With doing that, I’m not sure what is Christmas spending and what is our normal spending. At this point, I’m about 80% sure we went over budget.
Here’s just a few things I didn’t consider when setting that initial amount in my head:
– Shipping for gifts (we do not live near family so everything needs to be shipped)
– A care/Christmas package for a family member serving in Iraq
I didn’t plan well this year, so that’s why I’m pretty sure we went over budget. Next year, though, I hope to do better. I’m taking notes right now of everyone we sent gifts to and how much it cost so I have it handy next year. I also plan on using one of our online savings accounts to hold a Christmas fund. Starting in January, I will begin depositing an amount monthly so we do not have to come up with the money in November and December. I’m not sure of that amount yet – I’ll know more once I enter the detailed information in Quicken and see exactly how much we spent.
There is one thing I know for sure…we did not incur any new debt this Christmas! Everything was paid with cash we had. Prior to starting our debt reduction journey, our Christmas presents were financed by credit cards. We’ve learned our costly lesson about that one!