40-Day Christmas Challenge | Day 4: Make Your Cash Christmas Plan • Everyday Cheapskate

There’s a wonderfully effective way to keep Christmas spending under control.

Decide how much you’re going to spend before Christmas starts deciding for you.

I learned this one the expensive way.

For years, I approached Christmas spending from the other direction. I’d make the gift list, think about food, remember travel, add a few special things and eventually arrive at a number. A rather large number.

Then the question became, How are we going to pay for all of this?

Today we’re turning that around.

Today’s Challenge

Decide how much money you can afford to spend on all of Christmas without creating bills you’ll still be dealing with after the decorations come down.

That’s your number. Christmas has to fit inside it, not the other way around.

If figuring out what you can actually afford for Christmas feels a little murky, start there. Otherwise, put your number on paper and let’s give it some jobs.

Do This Today

1. Choose your total.

Look at the money you already have available for Christmas, plus money you’re reasonably certain will be available before you need to spend it. Maybe you’ve been saving all year. Maybe there’s money in your regular budget, a holiday fund, cash from a side job or some combination of those. Add it up.

That’s what Christmas has to work with.

If you’re starting later and have already spent money, count that too. We’re looking at the whole Christmas, not just what remains.

If figuring out what you can actually afford feels like the hard part, I’ve written more about how to have a Christmas without debt. For today, though, don’t overcomplicate it. Choose the amount you can spend without sending Christmas bills into January.

2. Divide it among the big categories.

You don’t need to know exactly what every gift or dinner will cost yet. We’re simply giving the money some jobs. Your categories might include:

Gifts
Food and baking
Travel
Giving
Cards and postage
Decorating
Activities and entertainment
Shipping
A small cushion for the things you forgot

Use the categories that fit your Christmas. If you don’t travel, you don’t need a travel category. If Christmas dinner is the event of the year at your house, food may deserve more.

Remember yesterday’s three priorities. This is where they begin to matter.

3. Keep adjusting until the categories fit the total.

This is the part that may require some erasing. If you have $1,000 available and your first pass adds up to $1,350, the answer isn’t to quietly change the total to $1,350. Something in the plan has to change.

Maybe gifts come down. Maybe you spend more on travel because seeing family made your Christmas Three. Maybe you buy dessert instead of making five kinds. Maybe this isn’t the year for new decorations.

You’re not trying to squeeze every bit of joy out of Christmas. You’re deciding where your money will do the most good.

Quick Win

Short on time? Write down one number:

I can afford to spend $________ on Christmas.

That’s enough for today. You can divide it into categories later, but don’t skip the number. It’s the boundary every later spending decision needs.

One Thing About Credit

I’m calling this a Cash Christmas Plan, but that doesn’t mean you have to walk around paying for everything with actual currency.

Use a credit card for convenience, rewards or purchase protection if that works for you. The important part is that the money to pay for the purchase is already in your Christmas plan.

Same goes for buy now, pay later.

A $100 gift doesn’t become a $25 gift because checkout offers four payments of $25. For our purposes, it’s a $100 purchase, and all $100 comes out of the Christmas plan today.

The payment method doesn’t change what something costs. That’s the part I don’t want us forgetting.

Why It Matters

A spending plan can sound restrictive until you have one. Then something interesting happens.

Instead of standing in a store or staring at a checkout screen wondering, Can I afford this?, you already know what Christmas can afford.

You can spend generously on something that matters because you’ve made room for it. You can pass on something that doesn’t without feeling as though you’re ruining Christmas.

And when one category runs high, you can make a deliberate adjustment somewhere else instead of discovering the whole problem in January.

The number isn’t there to spoil Christmas. It’s there to keep Christmas from spending money you don’t have.

Your Turn

Which Christmas expense has the greatest tendency to sneak up on you? Gifts? Food? Travel? Shipping? Those innocent-looking little extras? Tell us in the comments. I have a feeling “little extras” may have quite a fan club.