How to Make an Unbreakable Holiday Budget

There are just as many reasons to love the holidays as there are to hate them. On top of the bad list is the overindulgence: over-eating, over-spending, and over-extending in every way imaginable. One of the first things somebody with good intentions will suggest is a budget so that you can gain some level of transparency into what you have available to you, and what you are likely to do with it.


Strange way to start an article section but there you have it, however! There are unexpected incidentals. First, there is all the temptation, made all the worse by sophisticated marketing tools such as the monitoring your activities on the part of social media architects and credit card companies. There is also good old fashioned impulse purchase product placement, and let’s not forget the drop-in. Ah, the drop-in, where well-intentioned neighbours, business associates, friends, and family stop in with a gift and by golly you’d better have one for them. Now, let’s talk about all the kids and other loved-ones. The gift lists can pile up.

Then there are the office parties, the visits to friends, and the hosting. 

Finally, the holiday vacation deals and not-so-subtle reminders that you shouldn’t forget to get something for yourself.

Okay, point made. There is no shortage of ways and reasons to overlook something from the plan and forgo the budget. So, what to do?

How to bullet-proof your budget

To begin with, start with figuring out how much you can actually afford to spend. Flash forward to the end of January, the time when you will be sitting staring hopelessly at your bills and wondering how you will cover them. Now figure out how much is reasonable.

Next, section off the gift giving into categories (i.e. kids, spouse, spouse’s parents and family, your parents and family, his boss, your boss, secret Santa, house improvements, entertaining, hostess gifts for not whom you are likely to visit but how many visits you can physically accommodate, entertainment, etc.). Now go out and get some pre-paid credit cards. Spend your entire holiday budget on these cards and get a separate card or savings account for regular day-to-day living, something you still need to do during the holidays. If your family typically spends about $2,250 to survive a month, make sure this amount is available and inaccessible until the end of the holiday season. This will cover your utilities, phone bills, groceries, etc. 

For each card, clearly label them with permanent marker (use a red dot for close family, an orange one for other people’s kids, a green one for bosses, and a blue one for friends), then make a cheat sheet for your wallet that reminds you what each colour means for quick reference at the check-out counter. Figure out how many people fit into each category and average out how much you can get away with spending on each person. If you know that it is roughly $20 per gift and find a phenomenal sale that knocks off two people with $10 per piece then you have $40 to spend on somebody else. It’s simple math. Just try to keep track of who is covered already. In all that craziness it is easy to buy more gifts than you need to.

Get a separate envelope in which you can store all of the receipts and include a pen. Every time you buy something, write down whom it was for and how many gifts you got. Don’t worry about how much you spent, just how many.

Now, empty out your wallet of all ATM cards and regular access to cash and clearly mark on each card exactly what its purpose is. Even if you go to the check out and buy the same red scarf for your boss and your sister-in-law, from the same store, at the same time, use the card that is meant for the sister-in-law on her gift and the one for the boss for that gift. It doesn’t matter how busy the store is or how much of a rush you may be in. Just do it. Take the extra minute to save yourself a whole lot of trouble down the line.

Finally, make sure that when you budget, you boost your anticipated expenditures by 20%. This will give you wiggle room. If you end up not spending it, you can always use those pre-paid credit cards to buy groceries in the new year. Now, that’s a gift that just keeps on giving.