How To Create A Christmas Budget And Avoid Being Broke In January – Ad
The Christmas holiday is a great time to relax, enjoy and catch-up with friends and family.
It is also a time when the culture of today dictates that people spend money and lots of it!
One thing that doesn’t help with not spending money is having time off work and seeing others spend and be merry.
The big mistake is to assume that you also have to let yourself go and spend casually because it’s the thing to do.
January presents a big double dip for most people as it’s cold and freezing, plus most people start the year broke.
This is not exactly the best way to kick-start a new year, which is meant to be positive and forward-looking.
It’s for this reason that we as a family make sure that we approach the Christmas period very differently at home.
In fact, if you get this right, then the Christmas period should not be too different from any other months of the year in terms of spending.
So how do you go about making sure you have a Christmas budget that won’t leave you skint by January?
Plan and Stick to it
A budget in its simplest sense is a plan for the near future.
One of the best ways to approach Christmas it to focus only on planned expenses.
I.e. if there isn’t a line in the budget for it, don’t buy it.
This requires a lot of self-control as there will be many things out there that look nice and shiny at this time of year.
You might even convince yourself that you need a treat having worked hard all year and feel the boxing day sales are worth checking out.
One thing is for sure, applying emotion first to monetary decisions is one way to guarantee you’d overspend.
A practical way we deal with this at home is to have specific budgets for specific people. E.g. our boys get £20 each and their cousins get £10 – £20 each depending on age.
The money decision is made before the emotional decision around what we actually buy (if any).
This way we know exactly how much we might spend over the Christmas period on gifts almost to the penny.
What tends to happen practically is a little different.
Grandparents and family members buy so many presents for our boys that it ends up being unnecessary to spend the full budgeted amounts.
Related post: How To Create A Budget That Actually Works For You
Feel Free to Prioritise
I talked about presents above and a big part of budgeting is knowing who you will buy presents for.
In the ideal world, you’d want to buy everyone you know a small gift. However, this just isn’t possible.
There is actually no obligation to give presents over Christmas.
This is just a way in which the retail shops make money!
If you’re giving gifts, the goal should be to focus on buying meaningful gifts within your means.
The purpose for why you give someone a present is more important than giving one just for the sake of it.
Just spending quality time with your loved ones carries more weight than a gift given with no thought applied.
Related post: 5 Ways To Motivate Yourself To Budget Consistently
One of the best ways to get your money working well for you is to compare prices and shop around.
This applies to food, gifts and any other items you might be buying over Christmas.
It helps to start the price comparisons in advance.
However, good price comparison sites can show you whether prices are trending upwards or downwards.
This way you can make a decision on when might be the best time to buy.
Eat Healthy On A Budget
I’ve previously written about how we live well on a £50 weekly food budget
Eating and living well is a good culture to maintain over the Christmas period when most people pile on the pounds.
Buying healthy food isn’t as expensive as you might think if you shop around and plan your purchases.
Although turkey and all the trimmings is typically what is eaten over Christmas, there are healthy alternatives that won’t blow the budget.
BBC Good Food does a great list of healthy Christmas recipes that you can consider.
Healthy eating on a Christmas budget:
Sell Things To Fund Christmas
It’s amazing how much stuff can be accumulated throughout the year.
The Christmas period is a great time to consider decluttering.
If there are things you haven’t used since last Christmas, then you should definitely flog them!
Even second-hand items have a buyer out there waiting to take them off you.
Social media sites such as Facebook offer a great marketplace for near-instant sales.
They have no fees at all, so you can keep all your gains to either fund Christmas or boost your savings pot.
Also, online services like Plunc are good if you want a hassle-free way of recouping money for an old phone or tablet.
Related post: 50+ Ways To Save Over £10,000 Every Year
Don’t Bother With Gift Cards
Gift cards are the classic lazy present to buy and more times than not, they never get used!
If you’re going to give them, there are a few important things to be aware of:
- They expire – Anyone you give a gift card must redeem them within a time period.
- Admin fees – Some card providers start charging a fee if you don’t use the card within a particular time.
- Loss – Gift cards can be lost or even completely forgotten about.
Rather than give a gift card people will hardly appreciate and possibly not use, best to avoid it altogether.
Beware Of Debt
A big mistake one can make over Christmas it to make expenses using borrowed money.
This is so easily done as many are on autopilot and make purchases using their credit cards.
One way to avoid this is to use cash for all purchases as you’ll only buy what you can afford.
If you must borrow, do it using 0% spending cards that are readily available.
Remember of course that borrowed money must be paid back.
Many people’s credit scores suffer over Christmas and new year because of late payments or inability to repay debt.
Experian offers you the opportunity to check your credit score for free, forever.
So keeping an eye on this especially in the new year is a great idea.
Spending using credit cards does have one advantage if you’re spending over £100.
Unfortunately, companies can go out of business before your goods arrive.
Or you might even receive goods that are faulty on arrival.
If this happens, you have a Section 75 protection in the law, provided you spent over £100 using a credit card.
It ensures that the card company is jointly and severally liable for any breach of contract. Essentially the credit card company is just as liable as the retailer you buy from.
Related post: 7 Essential Habits For A Successful Debt Free Journey
To conclude, Christmas is a great time to give but it’s best done with some intent.
Ensuring that you don’t start the new year broke is possible but it requires a bit of work that everyone can actually do.
The key is, to begin with, a plan for the Christmas budget and do everything possible to stick to it.
Refusing to be swept along by others will go some way towards ensuring that you do Christmas on your own terms and on budget.
It’s certainly possible because we are doing it and so can you too.
- 15 Tips To Help You Stick To Your Budget
- How To Budget And Save On A Low Income
- 10 Reasons Why People Spend More Money Than They Earn
- Get Your Experian Credit Score For Free, Forever
What are you doing to make sure that you aren't going broke after Christmas? Please comment below.
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.
My family stopped gifts to the adults years ago and now my partner and his family have adopted that approach. My friends and colleagues are stressed out at this time of year whereas I am just looking forward to having some time off work.
Ken Okoroafor says
Sam, we actually do the same thing. Presents for kids only. In the wider family, some members have actually declined receiving presents for their kids, which I found quite interesting.
Enjoy your time off! It’s what counts the most.
Jonathan B says
Great post, Ken! My guilty pleasure over Christmas is chocolate 😀
We have a big family and it’s often tricky to get through Christmas without buying lots of pressies. One thing I’m doing differently though is not using my credit card. We’ve been buying our presents little by little through the year.
Merry Christmas to you and your family.
Ken Okoroafor says
Count me in on the chocolate! That’s quite a neat way of dealing with buying presents. Merry Christmas too.