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With the Christmas Season rapidly approaching and inflation at an all-time high you may have already thought about your shopping budget. If you haven’t already allocated your Christmas dollars, then stop what you’re doing and open an excel document (or this Budgeting App from our friends at Ramsey Solutions.)

How much to spend on Christmas?

According to data from National Retail Federation, Americans spend an average of $997.73 on gifts and Holiday items each Christmas season. That figure comes in just under the median pre-tax weekly salary of $1,001. It may not be surprising that the average American spends 25% of their December income on Christmas gifts and decorations, but if you’re honest, it’s probably unplanned overspending that’s got you feeling a little stressed out as the calendar marches on toward December. The recommended maximum for Christmas spending is 1% of your annual salary. Following the above example, if you make about $50,000 a year, then you should spend no more than $500 on Christmas expenses this year.

As proponents of Dave Ramsey’s debt-free model of living, we at Whitaker Myers want all our clients to live financially independent lives. An important piece of that is getting through the Christmas season without taking on more consumer debt by setting a budget. Here are a few tips to help you avoid the post-Christmas blues and a big lump of buyer’s remorse.

Make a Budget and Stick to it

This might seem like an obvious one, but if you haven’t set a budget then you will likely spend more than you want to (or should) on Christmas. If you have a generous heart and enjoy giving gifts to loved ones, then you are even more inclined to overspend, even if it’s out of the kindness of your heart.

Start with the dollar amount you’d like to allocate for spending. Once you’ve determined how much you’re comfortable spending, make a list of everyone for whom you plan to buy gifts. Budget a specific amount per person and stick to it. If you don’t like giving nick-nacks then consider gifting experiences or making something that will save you some money, without sacrificing thoughtfulness. Remember the 1% rule when making your budget.

This spreadsheet is a great way to make a plan for who you need to shop for and how much you would like to spend on them. Putting a dollar amount next to their name before you even start shopping helps you be more intentional with your holiday spending and shopping.

Save all Year

It might be too late for this one in 2022, but it’s never too early to start planning for 2023. You’ll be more equipped for staying on a budget if you have the funds already earmarked for Christmas. You can start a separate Christmas savings account which would be considered a sinking fund. We have multiple articles about sinking funds including one that explains what they are and one that discusses if they should be invested.

Don’t forget that you can even use a brokerage account for short-term savings goals. One of our financial advisors can help you allocate that money into wise investments for short-term objectives like saving for Christmas (or buying a home, car, appliance, etc.)

Don’t Overindulge

Those of you who are familiar with Dave Ramsey know that baby step two is all about getting out of debt. He advises people to attack their debt with “Gazelle intensity,” sacrificing in the short term to get rid of debt and live financially independent lives. At the core of this step is the avoidance of overindulgence. This is a major key to saving as well as paying off debt. If you are able to make more meals at home, watch old DVDs instead of paying for that subscription, and wear that old Christmas turtleneck in lieu of springing for a new cardigan, then you will be well on your way to freeing up some cash for your Christmas budget. It’s important to be critical with your spending, always asking yourself, “do I need this?” The answer is probably “no.”

If you struggle with budgeting, talking with a financial coach might be the right move for you. At Whitaker-Myers, we strive to help our clients get debt-free and start living their lives financially independently. Among our many services is financial coaching. If you want to talk to a financial coach about your budget, reach out to us today.


November 17, 2022

Nick Allen

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