Don’t Let Christmas Bust Your Budget

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It may be the most wonderful time of the year, but if money is already tight, Christmas can make it difficult to avoid overspending.

Although it may seem like a good idea to splurge on that perfect gift, you may end up paying for it later — literally. Instead of going into debt, these helpful hints will allow you to stay within your budget and avoid the stress of debt.

Set an overall budget

Before you spend a penny this Christmas, take a realistic look at your finances and determine how much money you can afford to spend. If you’re committed to not going into debt for the holidays, you may need to use money you have saved during the year. If you haven't saved anything, set aside part of your December paychecks to cover Christmas expenses. Write down your spending cap and use this number to inform your other decisions.

Allocate money to travel, decorations, meals and charitable gifts

When people think “holiday expenses,” they generally think “gifts.” But you’ll probably have other expenses during December that are not a part of your regular monthly budget. Determine how much you will need to travel and add in what you’ll spend on decorations, such as a tree, wreaths and lights. You should also include what you will spend on holiday meals and any charitable gifts you plan to make.

Don’t forget about wrapping paper

You don't want to spend all your money and realize you have nothing to wrap your presents with. There are many low-cost wrapping paper options and you can always try to reuse gift bags or try brown craft paper as other inexpensive alternatives.

List people to buy gifts for

Your remaining holiday spending money can be divided between all the people you want to give gifts to this year. In addition to your family, include any friends, co-workers, neighbors, and service people who you would like to give something to. The small $5 and $10 gifts can add up, so you need to include everybody in your list from the outset.

Set a spending limit for each person on your list

Although it’s tempting to just write down what you want to get for each person, the better way to approach your list is to first decide how much you can spend on each person. This helps ensure your money is allocated appropriately between people. It would be a shame to spend all your money on your kids because they want flashy, expensive gifts and forget about your spouse, who deserves something special, too.

If you happen to find the perfect gift for less than you have budgeted, you can add the money to another recipient's budgeted amount to help you stretch a bit to something you have your eye on.

Get crafty

Sometimes the best gifts are those you made yourself. If you have the time to work on them, these gifts will often be more meaningful than store-bought gifts; not to mention, they're far less expensive. Put your skills to work knitting scarves, canning pickles, making Christmas ornaments or baking cookies. These types of gifts are usually well received, and it can actually be relaxing to enjoy some crafty projects during December.