Holiday spending

One of the primary reasons I wanted to put a budget in place was for Christmas. After the fifth delivery on December 23rd, I realized we had a problem – or at least I had a problem. I didn’t feel as if I knew how much we were spending or where the money was going. And in January of every year, we had larger-than-normal credit card bills that were more of a stretch to pay off just as we headed into the new year.

Fortunately, we’ve gotten holiday spending under control, so if you find yourself spending too much around the holidays, here are a couple of solutions that have worked for us:

Make a List or Lists – make a list of gifts you have to buy, and tick off the list throughout the year. Doing this helps you set a budget for spending on gifts, and it also allows you to look for sales (more on that below). You can do the same for holiday events you expect to attend or parties or meals you expect to host.

Keep an Eye out for Deals – retail sales are seemingly more common now than ever before and knowing what you need to buy can help you take advantage of sales. Price monitoring services are also a great way to get deals (we have had good luck with Amazon tracker CamelCamelCamel). Finally, online groups on social media sites and Craigslist can be good places to find used or vintage items.

Use Credit Card Points– you typically don’t get the best bang-for-the-buck using credit card points for gift cards or merchandise. Still, if it is a question of optimizing points or not busting your budget, choosing the latter option can make sense.

Build a Budgetbuilding a budget is by far the most work of all options I have covered, but it is the most effective. Our approach for saving for the holidays was to set a total spending target for the year, and then set aside an equal amount each month to fund the total target. Typically, as the holidays approach we’ll have a decent size reserve remaining to fund any items remaining on the holiday lists we’ve made.

Holiday spending falls in a category that I think of as discretionary reserves, and we have other discretionary reserves for travel, vacations and our anniversary. A decent percentage of spending on all of those items comes around the holidays, so if we’re running short on one category, we can often pull from another reserve category that has been overfunded.

We still spend more around the holidays than at other times of the year. But by spreading some spending throughout the year, looking for deals and setting aside reserves, I can now cheerfully greet the UPS guy even as he stops by our house for the fifth time on December 23rd.