Ah, the holidays … good food, family time, twinkly lights, and for some, a lot of stress. You know that you should probably start discussing your holiday budget, but who wants to deal with the disagreements, worry, and added pressure. Might as well enjoy the holidays and worry about the budget when the bills show up in January, right?
As adults, we experience varying levels of stress when it comes to the holidays. And for most of us, one of those stressors is the holiday budget. But it doesn’t have to be this way. If you take the time to start planning today, you’ll finally be able to enjoy the holidays without having to worry about how you’ll pay for it later.
Why you need a holiday budget
In other posts I wrote, “Whether you’re making $30,000 per year or $300,000, YOU NEED A BUDGET!” That’s because as we level up in life, so does our lifestyle. If you’re over the age of 30, I imagine you’re no longer living the same lifestyle you that you were in college—eating ramen, drinking cheap beer, and slipping your hand under random couch cushions to find enough change for gas.
None of us are immune to this lifestyle creep, and that includes me and my husband. For years, we scrimped and saved; spending as little as possible to ensure financial freedom down the road. And as we’ve become more comfortable with that freedom and our income has risen, we’ve become a bit more freewheeling with our spending. The old Holly wouldn’t have spent $20 on a pack of socks, much less one pair.
They say you can never out-exercise a bad diet. And I’ll add that you can never out-earn bad financial habits. No matter how much you earn, you need to spend less than you make. And that’s why you need a budget.
In addition to the obvious math-y stuff, taking control of your finances is good for your health. Sure, you need enough money to have food and a warm place to sleep. But having a little extra allows so much more margin for better health. You can afford a gym membership, hire a good therapist, and most importantly lower your stress level when you’re not worried about making ends meet every day. For more tips on improving your financial health, check out this post.
There’s also your financial future to consider. I don’t know about you, but I’d rather be sure I can make ends me when I can no longer work than be known for the epic gifts I bought. And let’s be honest for a moment. I was once the aunt who bought epic gifts and can’t emphasize enough how quickly they were forgotten.
Finally, the most important reason to plan your holiday budget is your relationships! That’s what we love most about the holidays after all, isn’t it? Spending time with the people we love?
If you’re coupled, the first relationship you’ll want to consider is your partner. My husband, Jer, and I were lucky and laid down ground rules for holiday spending from the start. That doesn’t mean that we don’t have disagreements about how much he spends sometimes. But that’s a far cry from that couple we all know who lie, borrow, and hide their credit card bills from their spouse.
Aside from your partner, I’m sure we’ve all experienced how money matters can get dicey when it comes to friends and family. There are unspoken expectations, envy, greed, pride, and a whole host of things to navigate when it comes to other humans. Simply setting a budget sets the stage to start having better conversations with your loved ones. And better conversations are the first step to healthier relationships.
Where to begin
Start by asking yourself what you want your holidays to look like. Do you like to give and receive a lot of gifts? Or are you more of a minimalist? Do you love getting the whole family together for a big to-do? Or would you prefer a quiet cabin for two in the snowy mountains?
I imagine that we all have an expectation in our minds of what holidays should be like. That expectation is often formed by our childhood experiences. We do what we’ve always done because that’s the way we’ve always done it. But what if you’re a different person now? What if you don’t eat certain foods or believe in specific traditions? What if you simply want to pare down and simplify?
It’s important to spend time reflecting on what you want but keep in mind that it’s unlikely that everyone else will want the exact same thing. And that’s okay.
For example, if you’ve read the book, The 5 Love Languages, by Gary Chapman, you know that for some people, giving and receiving gifts is how they show and feel loved. A word of caution of all other you minimalists out there.
Once you’ve considered what your ideal holiday would look like, take a moment to compare that with your current traditions. How well are they aligned? What small adjustments can you make this year to make the holidays more enjoyable for you? How could these adjustments improve the holidays for the people you love? This process will likely take years and a lot of compromises, just as it has in our household, but I promise it’s worth it.
I really don’t want to admit this because I don’t want you to think that I’m some sort of monster, but I don’t love the holidays. I’m not sure if it was some sort of holiday trauma or just my punk rock nature, but I’ve always kind of been this way. As a child, my favorite Christmas carol was Oscar the Grouch’s song, I Hate Christmas.
My ideal Christmas would be spent backpacking in Kauai or on a secluded beach in Central America. No tree, no decorations, no presents, no ham, turkey, or mashed potatoes; just me and Jer and the great outdoors.
My sweet husband, Jer, apparently loves Christmas. I say apparently because I was completely unaware of this until our 17th holiday together. We were snowed in one weekend and he asked if I wanted to put a tree up. “Nah,” I responded, “then we have to take it down in a couple of weeks, and it makes a huge mess. It’s just not worth it.”
I learned quickly that was not the response he was looking for. He went on to say something about how I ruined Christmas and it was the one happy memory he had from his childhood.
Before I continue with the rest of the story, this seems like a good time to remind you that no one can read your mind. If you don’t like the way the holidays play out, you need to say something. Otherwise, everyone assumes it’s all good, even when it’s not.
Needless to say, we put up a tree and have every year since. We’ve compromised and pared back on decorations, so we’re both happy. Since then I’ve been very intentional about making Christmas special for Jer.
We’ve created new traditions with meals, Santa comes, and I work hard to make it fun, instead of another burden I have to suffer through. Maybe someday we’ll spend the holidays backpacking, but for now, we’ve figured out how to make them enjoyable for both of us.
How to create a holiday budget
Now that you know what your ideal holiday looks like, it’s time to start discussing the holiday budget. I’ll touch base on the conversations you’ll need to have around this new budget later. But be sure and set the budget first. You may get some pushback on your new ideas so it’s best to commit to your plan first so you can stay strong when the time to discuss it comes.
Generally speaking, it’s a good idea to have some sort of monthly budget. It doesn’t matter whether it’s a detailed excel grid you’ve been compiling for a decade or simply a percentage of your take-home pay you allow yourself to spend each month. You can learn more about budgets in this post, and this one.
Within that budget, you should have some sort of category that includes gifts. Some of you may be able to set aside what you need for the holidays from your monthly income. Others may need to save throughout the year. I’ve been in both camps and both are a-okay!
If you’re in the latter group and need to save up, take a few minutes to calculate how much your ideal holiday will cost. Don’t forget food, entertainment, gifts, decorations, travel, and anything else that’s specific to you.
Once you have that number, ask yourself if it’s realistic. This post was published in 2020 which has been a weird year financially. Unemployment’s quite a bit higher than it was just one year ago. And lots of people have taken pay cuts. You might not be able to celebrate in the same manner you did last year. Give yourself permission to celebrate within your means. Everyone who loves you will understand.
Once you have a realistic target, divide that number by the number of pay periods that remain between now and the holiday. Your job is to tuck that exact number away every pay period until the holiday. No exceptions—if you don’t save it you can’t spend it. Moving forward, it would be ideal to set this money aside monthly, making it less of a strain on your monthly budget.
Where you save this money is up to you and your will power. I figure out what we want to sock away each year, divide it by 26, and have that amount automatically transferred to another account each pay period. You could stuff it in your safe or freeze it in a block of water. Or employ the willpower of someone you trust and have them hold onto it for you. But first, read this post about financial boundaries so it doesn’t get weird.
As I mentioned, 2020 is a weird year. But even before all this, many people I know with a range of income levels dreaded their holiday expenses. So it’s safe to say we could all make a few cuts.
At the risk of ruining your Christmas too, I wonder, is it really necessary to exchange gifts with every friend and human you’re somehow related to? Again, I realize that gift-giving brings some people immense joy. If that’s you and you can afford it, give away. But for the rest of us, it’s time to ask some tough questions.
Jer and I come from HUGE Catholic families, so giving gifts to everyone isn’t practical. We set the expectation early on that we don’t expect gifts from siblings and the cutoff age for kid’s gifts is 19. I imagine some people didn’t love this at first. But I suspect that all these years later, they enjoy having that extra cash to spend on their own families.
If you’re already entrenched in massive, expensive gift-giving, it might be time for some uncomfortable conversations. Before you panic, keep in mind that your new ideas might be more welcomed than you expect. There are likely others who are tired of the holiday financial stress who will be thrilled to adopt your new plan. The important thing is that you’re honest about where you’re coming from and are willing to listen and compromise.
Unconventional ways to cut your holiday budget
You might be thinking, everything I’ve told you so far just sounds terrible. Why change? It’s easier to keep things as they are. Conversations like these are super uncomfortable.
To those of you, here’s where it gets fun. There are so many awesome ways to add meaning to your holidays that don’t cost a dime.
One year I put pens and little slips of paper next to our Christmas stockings. When we recognized something we appreciated about each other, we wrote it down and slipped it in. Then on Christmas Eve we sat and read them. Jer went as far as to write me a really meaningful letter. It was the best gift I’ve ever received.
For one of Jer’s birthdays, I bought a blank journal and wrote down all of the things I love about him, equivalent to that number of years. For our 15th wedding anniversary, I did something similar, writing the story of each year we’ve been together.
For those of you who love the idea of exchanging gifts but are sick of all of the clutter that comes with it, consider giving experience gifts. Gift certificates to restaurants, resorts, state parks, and season passes to museums make fabulous gifts. You could even make it extra special by joining them on their excursion if they’re into it.
Other people have shared that they play some sort of dice game. I’m sure you can find a bunch of fun variations on the internet. Some families do white elephant gifts, others do practical items like food, booze, or skincare. Get together and brainstorm fun ideas that work best for you.
Those of you who know me know that I don’t have children of my own. But I can imagine that sticking to a budget gets trickier when it’s your child. Go back to that list of what’s important to you and create a plan from there. I’ve heard of some families who do just one Santa gift and one from the parents. Others do something like this four gift challenge.
Got a crafty skill or the best cookie recipe on the planet? I don’t know anyone who doesn’t love homemade gifts. Or maybe your gift is simply hosting a nice dinner for friends, once this whole pandemic thing is over of course. And don’t forget about giving back. In addition to making donations in the names of your friends and loved ones, you could all get together for a group volunteering holiday extravaganza.
Remember, all good things take time. Don’t expect that you can slap a whole new way of doing things on the table and expect everyone to oblige. As with all things in life, you’ll get farther, faster, taking one small step at a time.
Looking for some mind-blowing statistics on just how much our holiday gift-giving costs us? Check out this article on Becoming Minimalist. If the fact that “$16 billion is wasted on unwanted gifts every year” doesn’t make you squeamish, I don’t know what will.
Curious which regions spend the most on Christmas and other fun facts? Check out this fascinating study from Motley Fool to learn more.
Ready for more reasons to rethink gift giving? Check out this post from Minnesota Outdoor Lifestyle blogger Ashley Bredemus. She makes a great case for the simple things and offers more unconventional gift ideas.
Change and uncomfortable conversations can be scary. But what’s scarier? Having to get uncomfortable with the people you love one time? Or having to worry about making ends meet every month? Find the courage to step out of your comfort zone and start enjoying the holidays again!