Budgeting for Christmas

image (37)The average family of four last year was expected to spend between $700 and $1,300 on Christmas, according to Nerdwallet.com. We save $40 a month for Christmas, for a total of $480, but that doesn’t include all of our expenses. Here is how the national average breaks down :

Gifts: $466-$875  Our budget covers gifts for our kids, but not our gifts to each other, our kids gifts to us, or our kid’s gifts to each other.

Decorations: $43-$81 This is hardly a needed annual expense.

Cards: $24-$44  We cover this expense out of our Christmas budget, as well as the postage.

Tree:  $36-$67 We use an artificial tree from year to year.

Food:  $84-$132 We cover this out of our food or entertainment budget.

Four movie tickets:  $24-$56 We do go to movies Christmas night and cover it out of our entertainment budget.  I doubt if the figure for food include popcorn at the theater.

Bottle of wine:  $6-$13  This isn’t a part of our Christmas tradition.

Writing this got me wondering if our Christmas budget was too small.  My wife says we spend $55-$60 on cards and postage.  The average on gift spending was $578 for a family of four last year.  Our kids have both graduated from high school.  Since our budget covers only one-third of gifts given, that would pro-rate to about $200, $100 for each kid.  That means our Christmas budget is a bit high.  We could cut it to $25 a month, and have $300 for Christmas 2016, which would be enough for cards and gifts for our kids.  We could also keep it at $40 a month, or $480 a year, but also cover birthdays presents for our daughters.  After discussing it, we decided to keep the current budget, but include birthdays.

Paying for Christmas has always been relatively easy for us, since we planned for it and developed a monthly budget.  We’ve never had unpaid credit card balances after Christmas.  If you don’t have a Christmas budget, it would be a good New Year’s Resolution to start one.  Think about what you need to include in your Christmas budget, divide the amount by twelve and save that amount every month.  Banks used to have Christmas club accounts that were used for this purpose.

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