Planning Ahead One Christmas Quarter at a Time

[Wendy Poling]

Unexpected expenses can put a dent in anyone's budget. We can't predict the future, but we can somewhat prepare for unexpected things that might come our way. Now that the Christmas season is over you might find yourself still paying for Christmas. Maybe it's paying down a higher credit card balance, or maybe having to cut back this month to cover the extra large expenses from last month.

Some of the best advice I ever received was to plan ahead for Christmas expenses. Some years I'm better than others, and it really all depends on how focused I am on the task at hand. Last year I did a pretty good job with our budget. We paid cash for everything this Christmas.

This is only happened because I planned ahead and exercised some will power.

For example, I almost ruined my holiday budget by splurging on a new $185 Christmas tree. Im not sure when Christmas trees got so expensive. The problem started when we moved 2+ years ago and I got rid of our shabby, but large, Christmas tree. While living in New England our home was typical for that area with smaller rooms, and lower ceilings. We purchased a cute, little 6ft tree for $40 to hold us over. It was perfect for that house. Now that we have moved to Texas where we have a vaulted ceiling we have space for a taller tree. I really, really wanted that 7 foot, $185 tree I found at my favorite big box store. In the end I said no to the tree and didn't ruin my budget, even though it was painful!

Just over the weekend I thought I'd visit that favorite big box store. I wandered into the Christmas clearance section and guess what greeted me?!

My beautiful, tall, pre-lit $185 Christmas tree was front and center! Except this time, it was now 70% off and only $55. Whaaat?! I snatched that baby up faster than you can say Christmas Cookies for everyone! The bonus, I had some extra money left in my Christmas budget!

Now I know what you might be thinking, "a lot of people prefer real trees". I actually grew up with real trees. Maybe we will go back to that tradition, but for now I'm happy with this bargain of a tree that will last us (hopefully) for many a Christmas to come!

If you are interested in paying cash for Christmas next year, here are my tips:

5 Steps to Save Money All Year for Christmas:

1. Determine a budget – Write down how much you'd like to spend on each person and family on your gift list. You might find you have to consolidate and give "couple gifts" instead of individual gifts. You might also decide to make Christmas treats for children's teachers, neighbors and close friends instead of individual gifts that can cause your budget to skyrocket.
2. Trim the list – Decide to do family gifts or just the kids of your extended family. For the adults on your list, choose thoughtful items like family photographs and traditional family recipes. When buying for the kids, save money by watching the sale flyers and daily deal websites like the Kids Woot!
3. Add extra – Don't forget the costs of baking supplies, decorations, other holiday related expenses.
4. Divide and Conquer – Now that you have your estimated Christmas budget amount divide it into 20. We have appx 10 shopping months left till next December. On each paycheck (1st and 15th) set aside a small amount to go towards your Christmas budget. You can transfer this amount to your savings account to keep it separate from your household checking account. Example: $1,000 Budget is $50 each paycheck. $500 Budget is $25 each paycheck. Note: If you work also, divide your amount by 40 (your two checks a month and his two checks a month starting in February and ending in November).
5. After Christmas Reserve – Set some money aside for after Christmas clearance sales to purchase decorations, wrapping paper, gift bags, lights, etc. — you might just score a new Christmas tree that you have always wanted for 70% off!

By taking the time to set aside money with each pay cycle you will avoid spending a huge amount from your regular household budget when Nov and Dec arrive. You can shop the sales, use coupons, subscribe to Daily Deal type websites, and experience less stress. Your credit card balance will also thank you!

How do you plan ahead for holiday expenses?

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