A Smart Mommy’s guide to Budgeting for Christmas

Piggy bank with christmas hat isolated on white background

It’s officially 97 days left until Christmas but I know that Christmas shopping and all that hoopla is still far from anyone’s mind. Heck, we just had the first day of school and most of us are focusing on Thanksgiving and making it through Halloween.

But I want you to start thinking about it NOW to make sure that Christmas is what it SHOULD be. And what it should be is about spending quality time with family and other loved ones and for Christians especially, about celebrating the birth of Jesus. It should be a time of peace, gratitude and fun, not stress, disappointment and exhaustion.

So, here is my step guide to planning and budgeting for a stress-free Christmas.

1. Make a list of your Christmas expenses.

Christmas expenses should include everything that you extra you incur because of the Christmas season. Be it taxis from your work holiday party, to tipping your daycare provider, to decorations, to gifts, you need sit down and list it all out. From there you will have to prioritize and decide what is a must expense (presents for your kids) to what you don’t need (a new dress for your work Christmas party).

2. Set a budget for your Christmas spending

Next you figure out what your budget for Christmas should be and how to allocate it.

To determine what your budget for Christmas should be, you need to determine what you can afford to save/spend over the next 4 months without it affecting your overall budget. The best way to determine this is by looking at your Life category and see what you can realistically set aside for Christmas. If what you can realistically save is $100 per month, THAT should be your budget.

You should absolutely NOT go into debt or cut into your debt repayment or savings categories just to satisfy a Christmas expense. Did half of your Christmas lights get destroyed by a flood in your garage? Oh well – be creative with what you have or even hit up your neighbours to see if they have any spares.

3. Set a budget for each child.

Once you’ve determined what you will be spending on presents, I would further set a budget for each child. I believe older children should have more because what they want is usually more expensive, and lets face it, the younger they are, the more entertained they are by the wrapping paper than by the actual presents anyway. Plus, I would rather get one or two nice gifts that will be used a long time (like a game console) over a bunch of little things that will be discarded before the day is over.

However, I do like to get even the youngest of babies SOMETHING – I know my oldest would have asked a LOT of questions about why Santa didn’t get the baby anything. This is a great time to buy some “needs” for younger babies and mask them as Christmas presents.

4. Plan ahead

I like to start my shopping early – like NOW early – for one, there is a much better selection of things and it makes it easier to stick to my budget. Try to suss out what your children would like – chances are that what they want now vs 3 months from now will not change too much – and start looking for deals. Go on-line, look up retailers and see if any of them have sales coming up. Plus, when you know a) how much you are going to spend and b) what you are looking to get you can keep your eyes open for those items when doing other errands. I got a cheap video game for my older son at Costco the other day when I was doing grocery shopping.

I’m usually done by November and it lets me focus on just enjoying the season and having fun without the stress.

5. Get creative!

I’ll be honest – I prefer to spend my Christmas budget on family more than on other things. If I can cut corners on other expenses, I will. Here are some good ways to do this.

  • Do you collect Air Miles or other rewards? If so, check your balance – I’ve redeemed points for gift cards to use as teacher/daycare provider gifts.
  • If you like baking, consider doing a baked-goods gift basket – you can get cute Christmas themed tins and boxes at the dollar store. Perfect for gifts for your neighbour or as a hostess gift for a party you are attending. If you don’t like baking, you can still do this almost as cheaply by buying treats in bulk and dividing them up, or even buying the ingredients in bulk and layering them in mason jars like this.
  • Encourage a Secret Santa for gift exchange with your extended family. Buying gifts for everyone from grandma to Aunt Jane can get pricey, even if you don’t spend a lot. Trust me, everyone will appreciate this!
  • Avoid getting hair cuts, facials or anything else that requires excessive tipping around the holidays (extra tipping over the holidays is a pet peeve of mine).
  • Make a list of gift ideas for your kids and have it ready if you get asked by other family members for ideas or if they would want to pool together for a special gift.
  • Consider doing Lay-by purchases – this is when you can set aside an item in a store (but not take it home) by putting down a deposit and then paying off the balance weekly for a specified amount of time – this could be a good way of spreading the cash outlay.
  • “Pad” the amount of presents for your kids with cheap stuff they love but you like to limit. Someone once mentioned that they would only ever get their favourite sugary cereal at Christmas and I loved that idea. My son LOVES Lucky Charms, but I think its total garbage and rarely buy it. So buying him a box at Christmas will take care of a gift AND I know he’ll love it.
  • Sometimes effort and thought over a gift can be much more meaningful and appreciated than an expensive gift. I remember reading about one mom, who was strapped for cash, got some inexpensive wooden boxes at a craft store and filled one for each of her teenage children with items from their childhood – things like their old report cards, photos, items of favourite clothing etc that she had kept over the years but had just been sitting in her attic. They apparently loved them, and now as adults still have those boxes and continue to add special items to them.
  • Do you have other ideas? Leave them in the comments section below!
Advertisements

Credit Card Do’s and Don’ts

credit_card_hd_wallpaper

Credit cards have a bad rap. On the TV show “Till Debt Do Us Part,” (which I totally love) the host Gail Vaz-Oxlade often starts the show by having the participants cut up their credit cards. Indeed, having a credit card can be dangerous to those who don’t use it responsibly. Many people see credit cards as “free money” or think that they are on top of their credit card debt just by paying the minimum payment, when really they are just getting into debt faster.

But I’ve always been taught (and still believe) that credit cards are a useful tool.  And if you use credits cards responsibly, they are a great way to keep track of your purchases (excellent for budgeting), can earn you great rewards and many have added benefits, such as travel insurance and can help you establish a good credit history.

DO:

  • Have one credit card available for emergencies.

Even if you are uncomfortable having one, I think that having access to one for emergencies (say your car breaks down somewhere and you need a tow, or your suitcase gets lost when you go on holiday and you need to buy some essentials etc). Make sure you have clear rules about what constitutes an emergency and stick to them.

  • Research the different cards available.

Make sure that you are aware of any additional fees or costs to the card that you may incur. Some cards have a promotional low interest rate to start, but it might sky rocket after a few months or even by just one late payment.

  • Pay your balance off IN FULL every month.

This is extremely important, as you will be charged interest on your ENTIRE original balance, not just the unpaid part. So say you have a balance of $1,000. You decide to pay $900 off and leave a $100 balance. You will be charged interest on the FULL $1,000.

  • Pay your balance ON TIME.

Not only will you be charged interest on your full balance, but your credit score will take a hit.

  • Check your statement every month for errors or fraudulent charges.

I’ve had my credit card compromised twice and each time I was able to get a full refund because I alerted the company right away. Make sure you do this, because most companies will assume the charge is legitimate if you don’t address it within 30 days of the statement date.

  • Fight your interest or other fee charges whenever you can.

I once paid my balance a day late due to submitting the payment online after banking hours and was charged interest. I called the company and told them that I always pay my balance off in full and on time, and that I shouldn’t be punished for a timing error. They waived the entire amount of interest and all it took was a quick call. Another friend never pays his annual fee because he calls the company a month before it is due and threatens to cancel his card if they don’t waive it.

DON’T

  • Take cash advances on your credit card.

They will charge you interest from the MOMENT you take the cash out. I don’t even give myself the option to do this – I rip up the PIN the moment it arrives.

  • Only pay the minimum the payment.

Not only does paying the minimum amount usually so small that it doesn’t make a dent in the debt you owe, but it will trigger interest charges.

  • Own too many credit cards

Specifically store credit cards. It seem like every store nowadays has their own credit card. But unless you really shop at a particular store regularly, there is no point. Also you want to make sure you are on top of all the bills you have to pay, and it gets hard the more cards you have to remember.

  • Max out your credit card.

Maxing out your card (when you hit your limit or go over it) will cause your interest rates to sky-rocket and could affect your credit rating. This is why it’s a good idea to have a high limit. I always ask for as high a limit as I can get not so I can spend a lot but so I have a lot of buffer room. I like to keep within 30% of my limit.

  • Buy something that you can’t afford to pay off right away.

It’s always a good idea to save money in cash for big ticket purchases, like say a couch. You can still use your credit card to pay for it in the store (I always do) because you can get some great points but then just use the cash to pay it off right away.