Confessions of a Shopaholic: How to Set a Budget for the Holidays

If there is one thing I love to do, it’s spend money. I know if my dad is reading this right now, he is shaking his head in disappointment. Sorry, dad. However, before you think, “This girl sounds financially irresponsible,” let me reassure you: I do keep a budget, and since graduation I’ve been pretty disciplined about sticking to it. Now that it’s been 4 months, I feel confident that I’m capable of sticking to it for the rest of my life. Obviously.

I’m sure everyone knows the importance of creating and sticking to a budget and knowing exactly where your money is going. If you don’t, check out these posts by Claire and Payton.  Enter the holidays. I think it is nearly impossible to not feel joy, celebration and giving during the holiday season. It’s easy to get wrapped up in the excitement, so it’s imperative to create a financial plan that will set you up for success. Research shows that the average American spends almost $1,500 on gifts for the holiday season. When you add in travel, decorations, and other events that you just can’t go through the holidays without doing, the expenses start piling up. As we all know, it is a LOT easier to spend money than it is to make money. When I was in high school, I worked food service jobs, and always took the approach of “How many hours do I need to work to afford that pair of jeans?” or whatever item I wanted at the time. 

1. Reflect on Your Values and Priorities

Before you start making declarations about budget details (speaking to the choir, because I love to declare things), it would be a good idea to determine what your values and priorities are going into this season. What traditions and experiences matter the most to you and your loved ones? Fully understanding your priorities serves as a solid budget foundation.

2. Determine Your Total Holiday Budget 

After clarifying your holiday priorities, make a separate, overall budget for the season. Ideally, this includes all holiday-related expenses, from gifts and travel to decorations and charitable year-end giving.  

3. Include a Contingency Fund

I grew up in a “what-if” household, so hardly anything took my parents by surprise. They were always prepared for the worst to happen, but always hoped for the best. Unfortunately (or fortunately if you’re into that) I think that way now. Even the most carefully planned budgets can encounter unexpected expenses. Set aside a contingency fund within your budget. This safety net will offer solid peace of mind and flexibility if things pop up.

4. Account for Charitable Giving 

The holidays and generosity go hand in hand. Think about allocating a meaningful portion of your budget to charitable initiatives or philanthropic organizations.

There’s nothing quite like the post-holiday, post-spend clarity that can really take the enjoyment out of things, so creating (and sticking to) a budget will mitigate the feelings of financial regret that some experience. By reflecting on your values, prioritizing spending categories, and adjusting as needed, you can create a holiday experience that is enjoyable and aligned with your financial goals.

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