Tips on how to not bust your budget over the holidays

Our favorite things about the upcoming holiday season:

  • Visiting with family and friends
  • Sparkly décor and general festivities
  • Gifts (we're just being honest)
  • As much hot chocolate or anything pumpkin flavored as we want, sans judgment

Our least favorite parts of the holiday season:

  • Air fare to visit family and friends
  • How all that fun holiday-themed décor adds up
  • Shelling out for gifts (again, being honest)
  • Sugar coma from the pumpkin spice lattes and guilt about all that hot chocolate

Admittedly, we can't help you very much with that sweet-hot-beverage addiction, but we can help you get through holiday madness with your financial health intact. As reader Mara put it:

"I am back in debt, but not by much. I want to pay this up by January so this year I will not be buying too many Christmas presents."

Smart! And yes, there is a way to celebrate the holidays in style and show everyone you love them, without winding up in the red yourself. 5 steps to curbing kids' impulse buys

So, well in advance of Christmas, Hanukkah, Kwanzaa or whatever you celebrate, we'll break down the four easy steps to budgeting for this year.

1. Decide where holiday spending fits in your budget

LearnVest lives by the 50/20/30 Rule, which states that 50 percent of your take-home pay should go toward essential living expenses like rent and food, 20 percent should go toward financial goals like retirement contributions and debt payments and 30 percent should go toward your lifestyle choices, which are the personal, and often fun, decisions you make about your money. Lifestyle choices often include things like your cable bill, charitable giving, entertainment, hobbies, etc. Why I don't regret walking out on my job

Although holiday spending often feels essential — How can you not give your mom a gift?— it falls into this 30 percent allocated to lifestyle choices.

Of course, if you are planning for holiday travel, gifts and more, you’ll need to bake them into your budget. And unless you already had a ton of wiggle room, this will probably mean cutting back in other areas to make up the difference. We'll show you how below.

The good news? If you start now, you're less likely to feel the pinch, less likely to make spendy, last-minute impulse-present buys and more likely to get a plane ticket for a price that won't eat up your whole gift budget.

2. Calculate how much you can spare

The easiest way to calculate where your holiday budget is coming from is to log in to LearnVest’s Money Center to see your spending trends. These are already grouped in your financial inbox according to the 50/20/30 Rule, so you can see at a glance what percentage of your income you’re spending on lifestyle expenses. I'm a recovering shopaholic

If you have money left in your lifestyle choices before the 30 percent mark, you can allocate the leftovers to holiday spending — and create a special color-coded folder to account for it. If not, it’s time to trim back.

Could you free up enough for holiday travel by cutting a dinner out once a month or temporarily stretching your time between salon visits? How about freezing your gym membership for two months and starting anew in January? You'd be amazed by how easy it is to free up funds when you see exactly how much you're spending on what is laid out before you. What Hurricane Sandy taught me about money

You can even set a specific savings goal for the holidays and play with various contribution amounts per month to see how far they would get you.

3. Obey the seasonal spending commandments

These are a few easy rules to follow to make sure your holidays are happy and financially healthy:

  1. Never go into credit card debt for holiday spending.
  2. Never dip into your emergency fund for the sake of buying gifts or decorating your home.
  3. Never go into credit card debt for the holidays. Seriously. Ever.

Does that mean you don’t have a lot of cash to spare for gifts for your loved ones? We have a feeling they’ll love you even if you don’t drop a boatload of cash for gifts for them.

This story originally appeared on LearnVest.

Discuss this post

It seems almost idiotic to go into debt to buy unecessary gifts for someone else...debt is good for housing and for expanding a profitable business...not gifts, cellphones or any other everyday expenses...

  • 2 votes
Reply#1 - Tue Nov 13, 2012 1:13 PM EST

Another thing is to get together with friends and relatives and set a limit on gift values. My family, back in the 90's, was outdoing each other at birthdays and Christmas and spending close to $100 on each gift out of middle class incomes. We finally decided we had what we wanted and limited spending to $25 per gift. If someone saw something amazing on sale for, say, $75, he or she got two others to go in on the gift. Today, it's $50. Consequently, we all look at coupons, etc. I got my nephew a $114.99 wiffle-ball pitching machine marked down to $79.99 and bought on a "half-price day" for $39.98. My sister found great, $250 earrings marked down to $99 and got me to go in with her on a gift for our brother's wife. Etc.

For others, I often look at low cost things that benefited me and put together an identical package for several friends. For example, when power goes out at my house -once or twice/year for several hours- I bought a flashlight/radio that runs either on batteries of by a generator you can crank for a minute and get several minutes of use for something like $9.99. Then I bought two small LED lanterns that run on AA-batteries and are bright enough for one to light a room and the other to read by for about $4 each. I made a package of flashlight/radio, two lanterns plus batteries - about $20 each - for 7 people. Since then we've had Irene, Sandy, and a freak very-high-wind storm last summer and I've gotten a lot of thank yous! Another package was built around shower back-washers, from long stemmed brushes to the -I forget the name- two-handled 3-foot long strips of cloth with rope-like material embedded in it. Then you order, cheap through Amazon, or at Walmart, etc. several of each item and you have a $20 present of good value to those you gift. One that's great for those who love watching football is Pat Kirwan's great book, "Keep Your Eye Off the Ball" - the spiral bound edition - of how to watch NFL football and get the most out of it. Even very-knowledgeable friends skimmed through their present and would say something like, "Oh! That's what Tampa Two means!" or "Oh! That's what the QB or Center is pointing at when they point just before the snap."

  • 1 vote
Reply#2 - Tue Nov 13, 2012 1:58 PM EST

Be giving throughout the year responsibly instead of spending ridiculously on only one day in a year. It is all hype and non-logical thinking.

  • 2 votes
Reply#3 - Tue Nov 13, 2012 1:58 PM EST

I make pumpkin pies with a recipe from my great grandmother that are absolutely fantastic. They may have a lot of sugar, but they are the greatest tasting pumpkin pies in the world. I disagree with the part you hate in the article:

  • Sugar coma from the pumpkin spice lattes and guilt about all that hot chocolate

Taste my pumpkin pie after eating a reasonable amount of my turkey, dressing and the sides. A small piece of pie is the perfect desert to eat, right before all of the guys go to watch football or outside to play with the kids. There is no guilt in a good meal followed by quality family time. Thank you for letting me voice my opinion.

    Reply#4 - Tue Nov 13, 2012 3:33 PM EST

    Our USA family values and traditions are lost one small step at a time mostly because of the greed of the few. Kathy Gifford gave an excellent opinion on this today.

    This entire concept of people going into debt to buy something from China as a gift that will be forgotten within days, has been foisted upon Americans as absolutely necessary by the same greedy tribe that now says they want their employees manning all stations so they can have 12 more hours of more impulse buys.

    Americans are sheep that are led around by Madison Avenue Bernays types that were born with the DNA of greed.

    • 1 vote
    Reply#5 - Wed Nov 14, 2012 10:35 AM EST

    On Thanksgiving day, my husband and I spend some good family time with his side families. We normally don'y have any gift for turkey day and we share making food; My sister in law cooks turkey and some side dishes and I make some desserts and appetizers and stuff. I think it is quite unfair that only one person or one family cooks for everybody except he/she REALLY wants to do. Specially moneywise, it can be a big burden too.

    On Chrsitmas, we actually refer some wish lists that everybody made earlier this year. And me and my husband put some mpney put aside for gift in a small envelop after Labor day. For 3months, money can be enough to buy gifts that my family want. That way, We would not have any big surprise gift but there wouldn't be any huge debt either!

      Reply#6 - Wed Nov 14, 2012 6:52 PM EST

      Starting in Jan. I start puting money aside for the next Christmas. Usually by July my Christmas envelope is done. It is never touched during the year and I don't have to stress about it in Nov. wondering where the money will come from. Ive done this for years and sure makes it easier to enjoy Christmas knowing it's paid for. We don't give large gifts but everyone get a little money and a gift to open.

        Reply#7 - Mon Nov 19, 2012 6:26 AM EST
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