How to Create a Holiday Budget + Free Holiday Budget Spreadsheet
Let’s go over How to Create a Holiday Budget Step by Step!
Thanksgiving and Christmas are just around the corner! Which is why creating a budget for yourself and sticking to it, is so important!
I know firsthand that the holidays can be financially stressful, so I am here to tell you about my secrets on how I maximize my holiday cheer and minimize my expenses.
WITH THAT SAID, HERE'S HOW TO CREATE A HOLIDAY BUDGET + GET A FREE HOLIDAY BUDGET SPREADSHEET!
Please note that this site contains affiliate links to products or services from third-party websites. Furthermore, we are not financial advisors. The information provided is for general informational purposes only and should not be considered as professional financial advice. By reading this post, you acknowledge and agree to the full terms of our disclaimer.
Table of Contents
“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?”
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Why You Need a Holiday Budget
Why is Budgeting So Important?: Helps You Understand Your Expenses
Understand Your Holiday Expenses
Knowing what you need to spend for will help you set a realistic budget for each expense category. Planning ahead of time will also significantly reduce your holiday stress.
Why is Budgeting So Important?: Helps You Avoid Debt
Avoid Debt
Why is Budgeting So Important?: Helps Minimize Negative Long-Term Financial Impact
Long-Term Financial Impact
Surely, we have each ran into the financial stress of overspending during the holidays. Sometimes, we want to go above and beyond for the ones we love. Unfortunately, that takes a toll on our financial health and goals.
Sticking to your budget, is not being stingy. It is called being financially responsible. You do not want to dig yourself into a hole and set yourself back from your future financial goals.
Tips to Creating a Holiday Budget
Holiday Budget Tip #1: Start Saving Early
Start saving 6-12+ months in advance
Holiday Budget Tip #2: Only What You Can Afford
Your Budget is What You Can Afford!
The most asked question for holiday budgeting is “How much should I budget for Christmas” … “Thanksgiving”… etc. I am here to tell you, whatever you can afford! THAT is your budget NOT your credit limit.
What is your discretionary income? As in, how much money do you have left over (after all your bills, savings etc) that you can put toward holiday spendings? If it is only $50 a month but you want to save more for the holidays, then start saving early on. Hence, tip 1.
Holiday Budget Tip #3: Communicate
Communicate with Your Family & Friends
Holiday Budget Tip #4: Share the Load
Share the Load with Others
Share the financial and holiday load with others!
Some ways to save money & share the load:
- Throw a Christmas/Thanksgiving Party Potluck v preparing/buying all the food yourself.
- Do a Gift Exchange or White Elephant or Secret Santa, rather than buying a gift per person.
- Ask each person to bring one game/activity that everyone can do together.
There are so many ways you can save money by sharing the load with others.
Receive more tips from our article “17 Smart Holiday Budgeting Tips to Keep You From Overspending” !
FREE HOLIDAY BUDGETSHEET
Holiday Budget Spending Categories
How to Build a Holiday Budget Step by Step
How to Create a Holiday Budget: Review Your Financial Situation
Review Your Financial Situation
- Assess your current finances. What are your fixed and variable expenses? What sinking funds (things you want to save up for) do you have? What is your discretionary income (money you have left after all of your bills & savings etc)? Can you make room for holiday spendings?
- Determine how much you can realistically spend. After you thoroughly evaluate all of your financial responsibilities, determine the amount of funds you have left that you can put aside for the holidays. Is this amount realistic? Is it too much or too little? How can you adjust your finances to meet your holiday sinking funds goal?
The most important thing to note is to NOT STRETCH YOURSELF THIN! Be realistic and understanding of your own financial situation. If you have a tight budget for the holidays, so let it be. At least you know now that you need to start saving early on for the next year. Prepare and adjust accordingly.
How to Create a Holiday Budget: List All Potential Expenses for the Holidays
List All Potential Holiday Expenses
- Categorize expenses: Gifts, travel, food, decorations, etc. List exactly what you need to save up money for. Also include a category for unexpected expenses, because life happens. Who knows, you might not find the present you’ve been wanting to get someone, or you might drop the tray full of food on the ground. LOL.
- Don’t forget hidden costs: Wrapping paper, postage, etc. It is easy to forget the little things like utensils, napkins, tape, wrapping paper etc. Do not forget to include them in your expenses.
How to Build a Holiday Budget: Set Spending Limits Per Category
Set Spending Limits
- Allocate funds to each category. Be realistic with the budget you set for each category. Are you putting too little or too much into a certain area? How much do you recall spending on that particular category in previous years?
- Consider prioritizing expenses. What are your most important expenses? Gifts for your loved ones, or gifts for friends? Remain flexible and open minded to changing up your plans that best fits your budget. If you just can’t afford it, find a different path to take that can make you feel content. For example, instead of one big gift per friend, create little goody bags for each friend + write a thoughtful card.
How to Build a Holiday Budget: Start Saving Early
Start Saving Early
Reflect on your holiday spendings from last year and use that as a reference on how much money you should set aside. It is always best to start saving early. Save yourself the mess and stress that comes from procrastinating.
Be financially responsible and create a sinking fund for the holidays 6-12 months ahead. Personally, I start 12 months ahead because I just do not like the idea of not having enough money and relying on my credit card!
How to Build a Holiday Budget: Track Your Spendings
Track Your Spendings
- Use a budget spreadsheet and/or a spendings tracker. We have created a free budget spreadsheet/tracker that you can use for the holidays, groceries etc. Whatever you need. Take advantage of this spreadsheet. It will help you save, think before you spend, and track your expenses thoroughly.
- Adjust your spendings as the season progresses. Emergencies happen, unexpected expenses occur and at times you need to tap into your holiday sinking funds. That is okay. Adjust accordingly, be flexible and stay open minded. Tighten your budget if needed, decrease your expense categories etc. Or if you happen to have an increase in cash flow, increase your budget.
What to Do If You Overspend
Overspending Post-Holiday Financial Recovery
Have a Personal Finance Budget Sheet
Have a Personal Finance Budget Sheet! Maybe you do not have a clear understanding of your financial situation. You may not have a detailed overview of your exact spendings and where your money is going.
Having everything on a piece of paper or on a budget sheet, detail by detail, provides you a roadmap to reach your financial goals AND allows you to see exactly how you handle your money.
Are you managing your money wisely? Or Are you just spending based on what your available balance is in your bank account?
Cut Expenses
Cut back temporarily on your overall variable expenses (e.g., personal spendings, subscriptions, dining out) and continue allocating the funds toward your credit card debt. Or if you tapped into a separate sinking fund, apply the money to that instead.
Of course, it may be easier said than done, which is why I think it is imperative to have an Annual or Monthly Budget Sheet for your own personal finances to track your income, expenses and gain a clear understanding of your financial situation.
Budget Wisely & Realistcally
Plan wisely and realistically for next year’s holiday budget. Again, I emphasize the importance of having an annual or monthly budget sheet for this step of your post-holiday financial recovery.
Examine your holiday expenses, how much you have under/overspent for each category and plan accordingly for next year. If you have overspent on gifts, but underspent on dining, decrease the budget for dining and increase the budget for gifts. Simple as that.
Etsy Personal Finance Budgetsheets
My Favorite Budgetsheets from Etsy!
NOW YOU KNOW HOW TO CREATE A REALISTIC HOLIDAY BUDGET!
We covered why you need a holiday budget, tips to create one, step by step on how to build a holiday budget for yourself and what to do if you overspend during the holidays. It is all up to you from here on out. You ultimately determine your financial standing based on your daily money habits. No one knows your expenses and income more than you do, so plan accordingly and be realistic.
Share this with your friends and family so you can all start planning your holiday budget, making informed financial decisions and securing your financial future!
Don’t forget to download our Free Holiday Budget Spreadsheet 🙂
love, Jas Joy
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