Why And How We Create A Christmas Budget

It’s that time of year, and shopping is already underway in earnest.

I’m sure that many of you have gotten started with your shopping, and many will also be waiting until the last minute.  I generally fall somewhere in between that spectrum.

I thought I’d take a little time to explain how we set and track our Christmas budget, and I’d love to see how it compares to yours.

History As Our Guide

We have one big spreadsheet that I’ve used for years to track various aspects of our personal finance, from a spending ledger to budgets for big items to investment gains and losses, and yes, a Christmas budget.

This is great because I can track prior years spending and set that as a starting point for this years budget.

mb-2015-11-christmas01This allows me to start off with:

  • Who we bought gifts for in the past
  • What we budgeted for gifts for each of them
  • What we actually spent on each person

These are two big pieces of information that, in reality, gets us most of the way there.  All I need to do is list out any changes in the list of individuals that we need to buy for, then look at the amounts to see what needs to change.

In some cases, we might have gone over, so I’ll look at why we went over and determine if that needs to be the base amount, or maybe it was just a one-time thing.

Adjustments Based On Availability

After I’m done coming with adjustments, I compare it to our total budget amount.

See, we save for Christmas shopping all year.  We earmark a fixed amount per month that sits in our account, and is allocated just for gifts.  We essentially take 8.3333% (or one-twelfth) of what we estimate we’ll spend, and set it aside.  Then, when it’s all said and done, we’re fully funded for Christmas shopping.  No worries about how we’ll pay for the credit card bills come January!

Usually the total amount is pretty close to what we budget, so not much tweaking is necessary, though there’s usually some back and forth between my wife and I on how to make sure everything is covered.

Tracking, Tracking, and Tracking

The difficult part I have is tracking the spending.  I can easily track what I spend, but as my wife does a majority of the shopping, and she’ll do it in big chunks at a time (usually 2 or 3 shopping days in total), I have to then work with her to try to make sense of all the charges and get a breakdown.  So, she might go to Marshall’s and spend $250, but if $80 is for her parents, $45 for our son, $75 for our daughter, and $50 for her sister, it gets difficult, though not impossible to track.

It gets even more complicated when she buys gifts for me.  She usually identifies one rarely used credit card and will put my purchases on that.   I have to ‘go dark’ on being able to track the card activity until Christmas arrives.  Inevitably, she’ll also buy stuff for other people in the same transactions, which then complicates it for me.  At that point, I don’t really know the remaining budget.  We then have to do manual exchanges of information.  This sounds easy enough but taking the automation away is really confusing, especially around the holidays!

Argh!  And, yes, I know, that means I track things a bit too precisely for my own good 🙂  But I’m good with that.

In the end, we sometimes go over a bit and sometimes come under on our total amount.  There is a little cushion built into our total monthly budget, so the difference is absorbed easily.

How Do You Budget?

Readers, I’d love to if and how you budget.  Are there any big similarities or differences to the strategies that we use?  I’m always open to making things easier!

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4 thoughts on “Why And How We Create A Christmas Budget

  1. Budgeting is really needed this December because of all those expenses. I created mine two weeks ago. I have now a list of things and gifts with its corresponding budget for each. And, I also set a criteria or standards for each group of people so that I can keep the expenses minimal and set an ideal budget or strategies for the gifts because this year, I am more on doing personalized gifts. Then, I also have a budget for unexpected expenses just in case when needed.
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    • I hope it works. I’m already pulling my hair out, not because the budgeting is shot, but that the breakdowns are impossible to keep track of no matter how much work I put into trying to get it done. I may actually simplify to an overall holiday budget.

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