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Answering a Reader Question About Our Christmas Budget


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!


  • Reply Mrs. Micah |

    Well not incurring debt is definitely the biggest part! It can be hard to budget for presents, since Christmas is about being generous and giving lovingly. Some people I know set upper limits for what they’ll buy for different people. x for spouses, x for children…and the total is a number they can afford to pay.

  • Reply Jessica zee |

    yes, I would agree. Not to incure debt would have to be a definiate proving factor. Budget and stay on track. regulate entertainment spending…

  • Reply Sandy |

    Some years ago I noticed that I would spend more for groceries if I charged the purchases or wrote a check for them, so I wanted to go to an all cash basis where for some reason, I do spend less.

    My grandmother used a system that has worked well for us, although I don’t recall her having coupons — just store savings.

    I bought a double pocketed coin purse separate from my billfold and filled one side with the cash we budgeted for groceries. Then after each grocery trip, I calculated the amount of coupons I’d used and added the store specials savings and “paid” myself by moving that amount to the second pocket of the coin purse. The cash stayed in the purse in case of some “grocery emergency”; but, surprisingly, none seemed to arise. The money also never was mixed with what I kept in my billfold. At the end of the month (or twice a month), I deposited the money in my “coupons” savings account at the bank and by Christmas had a very tidy sum readily available for presents. Being able to pay cash for Christmas is a wonderful feeling.

    Now if I can just make myself start shopping earlier and avoid the last minute rush … Maybe next year!

  • Reply jaye |

    My family celebrates Chanukah, which was early this year. I feel like I finally figured out how to do it right!

    In the past, it has been pretty stressful to come up with presents for 8 nights x 3 kids (no adult gifts). This year, I tried to encourage my kids (12, 10 and 7) to agree on 1 big, expensive gift instead of a bunch of little gifts. My reasons were two fold: For one thing, I have found myself buying “filler” gifts in the past, which drives me nuts. Secondly, my kids generally don’t really want that many things. They each might come up with two or three things they want, but really don’t have a big list (which can lead to filler gifts)! Well, they chose NOT to do that, so I had to come up with another idea.

    Here’s what I did: this year I really relied on my relatives to buy them the gifts I knew they would really want! In the past, I felt that it was important for the “special” gifts to come from us. Not so! Instead, when people called me in a panic, wondering what to get the kids, I suggested the things I knew they actually wanted! This made my relatives happy (so simple…they knew exactly what to get to make my kids happy). For example, my sons love Pokemon cards. I won’t spend my money on them. My sister, however, was thrilled to get them Target gift cards…easy for her, perfect for them.

    My parents are very generous, so I relied on them to help out with things that were needed. For example, my stepmother and dad got my oldest a new robe, which he both needed and wanted. My mom and step dad got him a new winter coat. Again, they were happy to give him things he wanted and needed. My mother and aunt took my daughter clothes shopping. They all LOVED it! I think they all knew that helping us out was better than any gift to my husband and I, which we told everyone was unnecessary.

    As it worked out, it was the best Chanukah ever. We paid cash, and really didn’t need to spend too much. We bought books, and a few other gifts on sale. We even gave them underwear and socks! The kids never noticed the difference, because they were so happy with all of their presents! And no wasted junk!

    One last thing…a tip for long-distance giving. Many of my relatives live far away, too. I rely heavily on free shipping (LL Bean, Lands’ End, etc.) I also bought magazine subscriptions for a few kids. Gift cards can be great, too, if you’re not opposed to them.

    Have a great Christmas!

  • Reply Matt |

    I work the same way – I try to keep the spending within a rough guestimate of a budget but the reality is often outside of this. As long as you don’t take on more debt to get the gifts you’re doing good.

  • Reply Ryan S. |

    For those who don’t live nearby, I consider places like Amazon or Apple which ship “free”, or online gift certificates, or magazine subscriptions. Being in Hawai’i, I understand all about being pelted with shipping charges (I once had a quote of $10,000 for UPS “ground” shipping for a 2.5 inch hard drive).

  • Reply MVP |

    Ugh, shipping…I agree, it’s a real pain, and now, a real expense! We live far from my family and some close friends. I reeled last week after spending $65 to ship just four packages (and that was the cheapest option!).

    Also, here’s a part of our Christmas budget strategy: we have six nieces and nephews (and one on the way). My husband and I don’t spend more than $10 on each of them, and we don’t buy gifts for the adults who have children, except our generous parents. We simply can’t afford it. With shipping, that all really adds up! Also, we only use cash, and we save $25 each month through the year into a Christmas fund account to help defray costs each December.

  • Reply Rob in Madrid |

    From the recieving point of view nothing thrills myself or my wife when we get hand made cards rather than a store bought one. For grandparents or aunts and uncles have the kids make cards for them, trust me they’ll be thrilled. Doesn’t have to be perfect or even very nice it’s the thought that counts

  • Reply Sherri |

    Thanks for answering my question and congrats that you didn’t go further into debt for Christmas this year.

    Like many of the other posters said, I often try and avoid shipping costs by purchasing from Amazon or other places with free shipping and get the gift send directly to them. I used to like getting things sent to me so i could wrap it and make it personal and then send it to my friend, but it just doesn’t make sense to pay for shipping twice!

    Also my best wishes to your family member serving in Iraq. It must be a very hard time of year to be away from the ones you love.

  • Reply Colleen in MA |

    I just had an “aha” moment reading your post. “[Spending] changes in relation to our cash flow (which I project months in advance in Quicken).” I have reduced my credit card debt by 1/3 this year, but some months were very tight for me financially because my freelance income came in irregular batches. I’m going to add another column to my budget (I keep mine in a spreadsheet in Google Docs) and based on what I think my cash flow will be for that quarter of the year, I’ll project how much I will pay to my debt and how much I’ll put towards my emergency budget. I know this sounds simple but when it comes to money I am a slow learner. Anyway, thanks for the insight!

  • Reply Blake |

    What our family does is take a good chuck out of our tax refund. If we ever have to pay then we are in trouble

  • Reply Jason |

    We just started contributing $25 a paycheck (biweekly) to our online savings account for this very reason. We labeled the account “Christmas Club” and plan to withdraw the money around the end of November (in time for post-Thanksgiving sales, of course).

So, what do you think ?