What It Means
A holiday budgetBudgetA plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it. See more is a plan for the season's spending, made before you start buying. It sets one total for everything the holidays cost, including gifts, food and hosting, travel and decorations, and splits that total into amounts for each part. The Consumer Financial Protection Bureau suggests working out the total from what's left after your regular bills, so the season doesn't push rent or other bills aside.
Try It: Build Your Holiday Budget and Monthly Savings
Example numbers for one household. Change any of them.
The plan fits inside what you can spend. Write down each gift's limit so it stays that way.
The plan runs over what you can spend. Trim the gift list, the per-gift amount or the travel before you start buying.
How People Say It
- "What's our number for Christmas this year?"
- "Let's cap gifts at $50 a person."
- "That's coming out of the holiday money."
The Breakdown
Worked example. A household with $1,200 set aside for the season (example numbers):
| Part of the season | Plan |
|---|---|
| Gifts, 8 people at $50 | $400 |
| Food and hosting | $250 |
| Travel | $300 |
| Decorations and cards | $75 |
| Total | $1,025 |
That leaves $175 unplanned for costs that turn up late. With three months to go, setting aside about $342 a month covers the whole plan by the time it's needed.
What the result means. If the total fits inside what you can spend, the job now is keeping each part to its line. If it runs over, change the plan before the shopping starts.
The CFPB's approach, in order
- Start from your regular budget and take out rent, bills and the other costs coming up in the next few months.
- Decide how much of what's left can go to the holidays.
- List who you're buying for, what you plan to get and how much each will cost.
- Shop from the list and cross items off as you go.
- Keep track of what you've spent and check it against the plan along the way.
Good to Know
The CFPB suggests bringing only the cash you plan to spend when you shop, so the limit is built in. If you'd rather use a credit card, it advises having a specific plan to pay the bill, with that money already set aside in your budget.
FAQ
How much should I spend on the holidays?
It depends on what's left after your regular bills. The CFPB's approach is to start from your regular budget, cover rent and upcoming bills first, and then decide how much of what's left can go to the season.
How do I stick to a holiday budget?
Make a list of who you're buying for and how much each gift will cost, and cross items off as you buy. The CFPB also suggests shopping with only the cash you plan to spend and checkingChecking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit. See more your total along the way.
Should I put holiday gifts on a credit card?
Only with a specific plan to pay the bill, according to the CFPB, and with that money already set aside in your budget. Otherwise it suggests leaving the card at home.
Do It in Buhata
Budget
Log each holiday purchase in Budget in Buhata as you make it, so you can see what's left of the season's plan before the next one.
Open BuhataRelated Terms and Categories
- Gift budget
A spending plan that sets how much you'll spend on gifts, person by person or occasion by occasion, for a season or a whole year.
- Sinking fund
Money set aside in small, regular amounts for a known future cost, so the bill doesn't land on a single paycheck.
- Christmas club account
A savings account you pay into on a schedule through the year, so the balance is ready for holiday shopping when the bank or credit union pays it out.
- Impulse spending
Buying something on the spur of the moment, without planning for it or checking it against your budget.
Sources
Consumer Financial Protection Bureau, "Plan your spending to avoid holiday debt"; Consumer Financial Protection Bureau, "A five-step spending plan to avoid holiday debt"
- www.consumerfinance.gov/about-us/blog/plan-your-spending-to-avoid-holiday-debt
- www.consumerfinance.gov/archive/blog/five-step-spending-plan-avoid-holiday-debt
Last updated .