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Do you have a plan to stay out of debt this Christmas?

This episode provides you with tips to create and keep a Christmas budget.
You'll learn how to determine your expenses, how to plan for them, and how to find some extra money to build your Christmas savings fund.

Resources Mentioned

How a No Spend Challenge Will Help You Save Money Fast

12-Week Christmas Savings Tracker

Action Task

This week's action task is to brainstorm your potential Christmas expenses and figure out how much you think you'll need to spend.

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Prefer to Read?

Below is the transcript from today's show. Or you can download the full transcript as a PDF.

How much money do you have in your Christmas savings fund? Wait, what? You don't have a Christmas savings fund yet? No worries. I've got you covered. In today's episode, I'm going to give you some tips to help you stay on budget and avoid taking on any debt this Christmas.

Welcome to the Go From Broke podcast where you'll learn how to take control of your money so you can stress less and save more. If you're tired of living paycheck to paycheck or constantly wondering where your money is going, you are in the right place. This podcast is all about giving you actionable tips and advice so you can get started improving your finances today.

Today, we're focused on how to stay on budget without canceling Christmas.

The first step is to actually determine your budget and set your spending goals. The trickiest part about having a successful debt-free Christmas is making sure you budget enough. But how do you know how much is enough? Just how much should you budget for Christmas?

Well, the best way is to look back at what you spent last year. Even if you weren't tracking your spending, you can probably pull up your old credit card or bank statements to get a rough idea of how much you'll need. If that's not an option shoot for about 1.5% of your income. So if you make around $50,000 a year budget $750. If you make closer to a hundred thousand, budget $1500.

Just keep in mind that not all of your expenses are going to be gifts. So before you get started with actually planning out your spending, let's brainstorm some of the different Christmas related expenses you may need to plan for.

First, obviously, gifts and presents. Thinking about your gift budget means determining how much you want to spend and on who. So put on your Santa hat and make a list of all the people you plan on giving gifts to, as well as those people you might end up needing a gift for.

So for example, you know you're going to need gifts for family, friends, potentially coworkers, your kids' teachers, classmates, neighbors. But you might also end up needing gifts for coaches, your boss, service providers, like your housekeeper or your mailman, and then there's charitable donations. The gifts add up fast, so make your list so that you know exactly how much to prepare for.

Next are the entertainment expenses. You may already be planning to get a new outfit for your office holiday party. But what about that ugly sweater you need now that your best friend's throwing a themed get together?

Or what if your Santa inflatable won't inflate and the Christmas lights won't light. If you don't want to be the neighborhood Scrooge, you're going to need some replacements.

You may also need to factor in the cost of extra food and alcohol, as well as any seasonal, special events like tickets to see the Nutcracker or photos with Santa.

Moving on to potentially your largest expense, assuming it applies, travel. Traveling around the holidays can be stressful enough without having to worry about every little extra expense. While you're budgeting out any trips you've got planned, factor in some of these potential costs to cover your bases.

Parking fees, eating out, hotels stays, souvenirs -I know we buy keepsake ornaments whenever we go and visit the North Pole.

Oh, and don't forget baggage fees for all those extra gifts weighing your suitcase down.

We actually once borrowed an extra suitcase to bring all of our Christmas gifts home because it was cheaper than paying to ship everything.

Speaking of shipping, don't forget to budget postage fees.

As fun as it is to send and receive Christmas cards, it's also an expense I always tend to forget about, and it can be a large one at that.

But even larger is the cost to ship gifts. I can't tell you how many times I've paid more for shipping than for the actual gifts. My family has made a deal to wrap each other's gifts, depending on who they're for, so we can save on shipping costs by sending things directly.

If you want your gifts to remain a surprise, do the math and see if paying for gift wrap services may be cheaper than shipping.

Also, a pro-tip: postage in the U. S. Is determined by package dimensions and weight. If your gift is large or heavy, it will likely cost a fortune to ship. So if you're planning on shopping locally and then shipping everything, make sure you get an estimate on your shipping costs. You can do that on the post office's website, USPS.com. And then you just enter in your zip codes and your estimated package dimensions as well as weight and it will tell you what it will cost to ship it.

Okay, now that you have a plan for how much you want to spend this Christmas, it's time to start building your budget and making sure you can fully fund it.

The first step is going to be figuring out where to put the money. Whether it's creating a budget category for it, or opening up a separate savings account at your bank, you just want to make sure you have some way to keep that money separate, so you don't risk over spending. I do a combination. I've currently got all my Christmas savings in the Peak Money app since that's what I use for my different savings challenges.

But I'll be transferring it back into my regular checking before I spend it. That way I can use YNAB to track my actual spending and expenses.

Having a budget plan and a place to keep track of your cash and spending is great. But with Christmas fast approaching and Black Friday literally just around the corner, you may be worried about actually funding your budget.

In case you haven't been saving up, I thought I'd give you some ideas to find some extra money and avoid taking on debt.

The fastest and easiest way to find extra money is actually do a budget sweep. This assumes you've got a budget already, but the idea is to take any leftover funds from other budget categories and use them to build your Christmas fund.

For example, when I budget, I round up most of our monthly payments just to keep things even. So a $26 monthly expense will usually have $30 budgeted toward it. Over time, those little overages add up. So when you're ready, you can zero out your non savings categories and add that extra money to your Christmas savings.

If you use cash envelopes, the approach would be similar. Any money leftover in an envelope would probably usually get rolled forward to the next month. But in this case you could just move it into your Christmas envelope.

Another way to save up some money is to take on a savings challenge. Now I explained savings challenges and walked through five of my favorites in episode eight last week. But to summarize, you're basically gamifying your savings by adjusting your behavior. Some are more effective than others, especially when you're on a limited timetable.

I'd start with a no spend challenge to save money fast. You can get a complete rundown of how to do one over on the website at gofrombroke.com/nospend. But the basic idea is you don't spend anything outside of normal expenses and essentials, and whatever you would save you can put in your Christmas fund.

You can also just set the intention to save a certain amount between now and Christmas. For example, I have my 12 week Christmas savings tracker where currently I'm saving $75 every week.

Depending on how much time you have left, how much money you want to save you would do the math yourself. But it's a good way if you can be intentional about actually setting that savings aside to keep track of it. You can download my free 12 week Christmas savings tracker at gofrombroke.com/christmassavings. And that'll help you track how much you're saving.

While I love finding ways to save more from the money we already have coming in, there's only so much you can do without adding to your income. So to find some extra cash to add to your Christmas fund, think about any side jobs you could pick up. Maybe you can become an Instacart shopper or a pet sitter with Rover. Or if you're the crafty type or a great cook, maybe you can sell your product or services on the side to bring in some extra money.

You could also look at selling your stuff either online or at a yard sale. Depending on what you have, you may actually do really well with this. If you have nice clothes, you can go on Mercari and make a small fortune. If you have a lot of books, you may not make as much money.

It just depends what the kind of stuff you have to sell, but it does have the added benefit of clearing out space for those future Christmas gifts.

Finally, one of my favorite sources of extra cash, especially at the end of the year is credit card rewards.

While I try to plan for Christmas as best as I can, I do save up my cashback specifically so that I have a sort of hidden stash that I can tap into if I haven't saved enough.

So if you've got cash back credit cards, go check your rewards balance and see if that's something you can add to your Christmas fund.

You could also use your credit card's rewards portal to potentially find really good deals on some of the gifts you want to buy.

So are you ready to make this the Christmas you finally stay on budget?

I've given you several tips and ideas in this episode. So now it's time to go and put it into action. For your action task this week. I want you to start by brainstorming all the expenses you expect and figuring out a rough idea of how much money you need to budget.

It's easy to get caught up in the holiday shopping rush and tell yourself, you'll worry about the money later. But with a little forward-thinking you can plan ahead and give yourself the gift of a debt-free Christmas.

As always take action and make it a great day.