This year, I finally learned to budget for the end-of-year gift-buying season since day one—January 1, that is. And you can, too.
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I've always been someone who loved the holidays and enjoyed buying gifts for all of my friends and family. But that enjoyment came withs a lot of money spent—usually money that I didn't actually have in my bank account. I would simply charge all of the gifts I bought—and the wrapping and the eggnog—and plan to worry about it in January. 

The problem with this? I would end up overwhelmed and finding myself paying off my holiday debt for months the next year. Things got a bit better in my first few years of marriage, when budgeting became a top priority for my husband and me—but the pandemic threw us completely off course. 

After having a baby at the end of March 2020 and spending most of the year in isolation (and terror of my baby catching COVID-19), I went all out for the holidays. We definitely had quite a bit of debt starting out in 2021, but I justified it by telling myself that it was okay because it was my baby's first Christmas and we had a very tough year.

But with the ongoing pandemic still impacting our daily lives (thanks, Omicron!), I can't keep justifying going into debt every holiday season. That's why, this year, I finally learned to budget for the end of the year gift-buying season since day one—January 1, that is. 

Many Americans charge holiday cheer.

I felt incredibly guilty for sending new my family into debt. But, it turns out, I am far from the only American who made charging holiday expenses onto a credit card a habit. According to a 2020 survey by Consolidated Credit, 30% of people say they use credit cards for holiday gifts and celebrations. Another 2020 survey by MagnifyMoney found similar results, with 31% of respondents saying that they plan to take on debt in order to pay for holiday expenses. Meanwhile, a CreditCards.com poll in November 2021 found that 41% of Americans are willing to go into debt for holiday cheer. 

What's worse is that none of this is new. There are reports and polls and surveys going back years and years that show Americans rely on their credit cards for the holidays. And it doesn't seem to be getting better, since American consumer spending on holiday gifts and expenses has been increasing since 2009, according to Investopedia. (According to the same report, Americans now expect to spend an average of $998 on gifts, holiday items, and other seasonal expenses.) 

The problem with charging all of your holiday cheer onto a credit card? For many of us, it takes an average of 14 weeks to pay that off that holiday spending. And who really wants to start the year off feeling anxiety over our credit card balances? I know I don't. But I've certainly done it—all in the name of seeing my baby surrounded by wrapping paper on Christmas morning. 

Irina Gonzalez
Irina Gonzalez
| Credit: Irina Gonzalez

Saving for the holidays well in advance makes a difference.

Thankfully, there is a better way forward. It's a trick I discovered in the early days of my marriage when I was trying to figure out how two very different people can combine finances and not fight every day. 

In You Need a Budget, a proven method and software program to help people learn how to manage their money, there are a few simple rules for finances. Although their program ultimately didn't jive with my lifestyle, I took away one big learning: Embrace your true expenses. 

In YNAB speak, this essentially means budgeting for more than just your basic monthly expenses of rent/mortgage, food, electric bill, etc. Instead, YNAB encourages people to look at their bigger, less frequent expenses. What does this mean? It's looking at all of the things that you know you are going to spend money as they pop up throughout the year, such as vet bills, summer camps, holiday gifts and travel, and budgeting for those. 

After you have figured out your early expenses, what you will want to do is add them all up and divide that number by 12. And that's how much you need to save every month in order to start budgeting for the holidays beginning on January 1. 

Sound a bit confusing? Here's what it looks like in my house for this year: 

  • $1000- vet bills for our three fur babies
  • $1870- car insurance, twice a year, for two cars
  • $1500- new winter tires for both cars
  • $1200- birthday presents and holiday gifts
  • $432- yearly subscription to Lovevery for our toddler
  • $800- tax prep for our accountant
  • $120- yearly Amazon Prime subscription
  • $100- yearly Shipt subscription 
  • $1180- needed repairs to our house
  • = $8202 total for the year, $683.50 per month

As you can see, for my family, the monthly amount that we need to save in order to not have to end up putting the holidays on a credit card again is $100 per month—and $683.50 in order to not have to put any of our other big expenses on a credit card. 

It may sound simple—and perhaps it's a budgeting trick you already knew—but it's saved my family in years past and will be how we proceed in future years, pandemic be damned. I know that this is the best way to make sure that we don't end up in the same post-holiday credit card debt that many families end up in. That, let's face it, I have ended up in. 

Instead, I'll be budgeting for the holidays when the new year begins and, because of this system, having the happiest holiday season yet.