Here's How to Create an Effective Christmas Budget

Here’s How to Create an Effective Christmas Budget

Christmas Budget and Creating a Christmas Gift Budget; Peter Kwadwo Asare Nyarko

“Christmas is supposed to be a joyful time of the year spent with love ones. But for a lot of people, Christmas is filled with pressure, debt, and questionable financial decisions”, I accentuated in one of my financial literacy discussion.

Before I expound on Christmas budget and creating a Christmas Gift Budget, I have a story of a participant from one of my speaking engagement this year. I was discussing the Christmas budget and why it is important with my audience.

“I know what it is like to fall into that second category you mentioned, she said. Being filled with pressure, debt, and questionable financial decisions, she continued. Before my family started budgeting, my dad tried to wing it when it comes to Christmas presents and extra holiday spending. He had no plan, didn’t save money in advance, and he ended every year deeper in debt with “a sick feeling in his stomach”, as he –my day put it, she smiled.

But that’s not the end of our story. As we began to take control of our finances through budgeting, I found that we could still shower family and friends with a little extra joy at Christmas. The difference was this. We didn’t have to charge those Christmas gifts on my dad’s paychecks. He didn’t have to take on debt with no plan for how to repay it. He didn’t need to end the holiday season, feeling frustrated and overwhelmed.”

Her story is typical of most household in Ghana and Africa at large. Families don’t have to fall to the myth that you have to spend big on the people you love. The cost of a gift has nothing to do with how much you care for the person you are giving it to. Many times it is the simplest things that bring the most joy.

Also, if money is tight, don’t try to put on a brave face and pretend you have got plenty of money to throw around. Be honest with your family and friends. Let them know Christmas will be a little different this year.

Christmas budget is a plan of how much money you will spend during the Christmas festive and sticking to it. It is always best to give than to receive, so you must be prepared for it. You must give cheerfully this Christmas festive but it should follow a laid down procedure, which I called “A Christmas Gift Budget.”

How to Make Christmas Gift Budget

The first step to planning for a debt-free Christmas is to, well, have a plan. A Christmas budget helps you avoid overspending and unnecessary borrowing. As a matter of fact, you must have a Christmas fund ahead of every Christmas. Your Christmas fund helps you achieve your goal, that’s having enough money to gift your family and friends so you wouldn’t be tempted to fall into old patterns. If you don’t have one for this year, no problem, create one in 2020.

Save as Early as Possible

Rocking your Christmas gift budget starts early. You want to put aside enough cash to cover those extra holiday expenses. Mostly, it is best to begin this process as early in the year as possible.

The amount you save will be the foundation for the Christmas budget you are going to create. Let’s say you start in January and stuck away GHS 50.00 per month out of your paychecks or income. By November, you would have saved GHS 550.00 in your Christmas fund for your Christmas budget.

If you haven’t started saving yet, don’t panic. A new year is approaching. Moreover, you can work out your budget this December with the amount of money you want to spend for Christmas (say GHS 200.00, GHS 300.00, GHS 400.00, etc.).

Christmas budget might be tighter than you are used to, it is still enough to do something special for your loved ones, and that is really the point, and not how much you spend.

Write it Down

Once you have created your Christmas shopping and gift fund (however big or small it may be), you will know how much you can afford to spend on extra holiday expenses. This is the figure you should write at the top of your Christmas Planning Worksheets for your total budget amount.

Contact Peter via for Christmas Planning Worksheets Template.

On your worksheets, fill in the different areas where you expect to spend money this Christmas. Keep in mind; extra holiday expenses can include more than just a gifts.

You may also need to prepare your budget for;

  • Holiday Meals
  • Christmas cards
  • Holiday Travel
  • Christmas Décor
  • Charitable Donations

Finally, you can fill out your Christmas Gift Budget Worksheet. Take your starting budget, subtract any planned expenses from spending categories above, and see how much money you have left for gifts.

Write down the names of people you will gift this festive season.

After you write down the names of people you want to purchase a gift for this Christmas, you can access your remaining budget to figure out how much you can afford to spend per person. To make this process easier, some people assign a percentage of their gift budget to each person on their list. It might look something like;

  • Child – 20%
  • Partner – 20%
  • Parents – 40% (20% each)
  • Friends – 20% (5% each)

If you followed the above example, with GHS 400.00 left in your budget for gift-giving, you could spend up to these amounts;

  • Child – GHS 80.00
  • Partner – GHS 80.00
  • Parents – GHS 160 (GHS 80.00 each)
  • Friends – GHS 80 (GHS 20.00 each)

How to Christmas Shop on a Budget

Here are few tips to help your Christmas shop on a budget

  1. Leave your credit card at home and shop with cash
  2. Don’t give in to the temptation to buy for yourself
  3. Stick to your shopping list
  4. Search for coupons and discounts in advance
  5. Buy in bulk

Written by Peter Kwadwo Asare Nyarko; a financial educator, author and a financial literacy advocate.

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