Setting a Budget That Won't Break the Bank This Christmas

Budgeting for the Christmas holidays is becoming more and more important for most households as tough financial measures start to bite across the globe. Setting your budget can be a daunting task and many people will struggle with where to start. It can be done easily though and all you need is a sheet of paper, a pen and a good idea of what state your personal finances are in.

To start from scratch, write down all the things that you will be doing, or usually like to do, over the Christmas holiday season. This could be gift shopping, nights out, entertaining at home or even travelling to see friends and family. Recalling what you spent in previous years in each category can be difficult, so start by allocating what feels like a reasonable amount of money to each item based on what you will be doing. For example, when planning Christmas gift shopping, write down the names of all the people you will be buying gifts for and allocate an amount of money to each person that fits with your relationship and what you would normally give. Adding up all of this list will give you a basic budget for gift shopping. Similarly, entertaining at home can be planned by setting out your menu and working out what it will cost you.

Once you've got all of your categories noted down and an amount of money planned against each one, you can add it all up to get the total. Compare this to what funds you know will be available and you'll be able to see where savings might need to be made or amounts swapped over from one category to another. If you're satisfied that you can afford to spend this amount of money then you've effectively set your Christmas budget. You can plan the rest of your household finances for the Christmas holidays around this knowing that you should have a known outgoing.

If however, you feel that you've come up with a figure that's a little out of reach, you'll have to start trimming here and there to get it down. Look at what you set for each person you're buying Christmas gifts for and adjust it where you think you can. Remember that a little shopping around especially online can save you quite a bit at Christmas time. Similarly, if you need or intend to travel at Christmas, it can be an expensive time. Ask yourself if you can travel at times other than peak times to reduce what you'll need to spend? Can you be away for a shorter trip?

Once you've managed to squeeze your holiday expectations into a budget, it's essential that you stick to it. No matter how challenging this may seem, in times of financial hardship, working to a budget needs to be a way of life if you're to save yourself from future financial problems. Don't let Christmas cost you more than money, set a budget early and work with it.