holiday shopping

Even though it’s July, it’s never too early to start budgeting for the holidays. And that’s exactly what we are talking about for this month’s financial fitness challenge. In this article, we look at how to make a holiday budget and how to painlessly put money towards it. Don’t worry If you have missed any of our prior 12 Month Challenge articles, you can go back and read them anytime. So far we have covered:

• Analyzing Spending
• Creating A Budget
• Preparing For Taxes
• Paying Down Credit Cards
• Creating A Will
• Storing And Protecting Sensitive Documents

Why You Should Have A Separate Holiday Budget

Having a separate holiday budget is helpful for many reasons. First, holidays always seem to sneak up on your bank account before you are ready and cost more and more every year. Second, many people are stuck in an unhealthy holiday cycle of charging holiday expenses and then spending the rest of the year paying it off...just in time for the next holiday season. Third, making a conscientious holiday budget helps you stay focused on the important parts of the holidays: friends, family, traditions, and good memories, rather than the commercialized version of the holidays. Lastly, remove some stress from the season by knowing you have sufficient funds to make it a great holiday for you and your loved ones. But how do you create a holiday budget? Find out below.

How To Create A Holiday Budget

If you have an idea of how much you spend each holiday season, that number is a good place to start. Are you comfortable with that number? Do you want to adjust it? If you are a holiday spender that doesn’t keep track or plan, do you feel like you end the holiday season wishing you had done less? The first step in deciding on a holiday budget is figuring out what is most important to you. Is it get-togethers? Gift-giving? Reconnecting? Holiday adventures? By first prioritizing your ideal holiday experience, you can better allocate funds to focus on what matters most.

Next, make a list of every potential holiday expense and how much you feel is reasonable to allocate to each category. Below are some holiday expenses to think about (though you may have others):

• Holiday photos and cards;
• Holiday parties;
• Gift-giving;
• Decorating;
• Travel;
• Religious events or other traditions you take part in;
• Charitable giving.


With your list in mind, you can better decide how much to budget for the holidays. Then you just have to start saving.

Finding Money For Your Holiday Budget

Budgeting for the holidays is one piece, but how do you come up with that extra money? Some people start saving at the first of the year; some wait till summer or even fall. Whichever method you choose, here are some ideas to get you started:

Make Smart Spending Swaps. As the holidays approach, you can divert any discretional spending expenses to your holiday savings. Here’s an example, instead of going out for dinner, eat at home and save that extra cash.

Save Your Pennies. Any easy way to start building your holiday fund without much effort is to put any small, extra income directly to your budget. For example, you can collect any loose change throughout the year and cash it in specifically for holiday spending. If you use cashback or couponing apps, transfer that to your holiday savings. The same goes for any small refunds or bank fee returns. The more small deposits you make, the more your fund will grow.

Earn Money Specifically For The Holidays. As the holidays approach, a good way to make room for new gifts, as well as earn money for the holidays is by cleaning out your house and selling items at a garage sale or online marketplaces. You can also pick up a side gig with a hobby you are already involved in with the goal to finance your holidays.

Make A Commitment To Simplify

Beyond budgeting, another way to save your finances this holiday season is to simplify your expenses. Rather than buying gifts, make them. Send holiday cards instead of small gifts to co-workers, family members, and acquaintances. Give your time, rather than tangible items. Make holiday get-togethers potluck rather than hosting everything yourself. Start a tradition of limited gift-giving or of spending money on holiday trips or experiences rather than things. The options are endless, and with some creativity, your holidays will be less stressful, more meaningful, and leave you with more money in your account.