The 50/20/30 Guide to Holiday Budgeting: Financial Planners Share Their Secrets

holiday spending

We know that December can be a tempting time of year, especially when it comes to overspending.

Unfortunately, the budget organization principle known as the 50/20/30 rule doesn't look kindly on temptation.

The rule says that up to 50% of your monthly budget should be designated for essential expenses, such as rent and groceries. At least 20% should go toward financial priorities—debt payments and retirement savings—that will help you build a strong foundation. And 30% should be allocated for lifestyle choices, including eating out, shopping and charitable giving.

The problem is that the cash you lay out for your seasonal trappings—whether it's yards of tinsel, gifts for friends and family or a special treat for yourself—is considered a lifestyle choice, so it's easy to put a strain on that 30% during the holidays.

In fact, according to research from Chase Blueprint® and AOL, one-third of people plan to get gifts for themselves this year. And those who “totally agree” that self-gifting is important also expect to spend $935 on others—underpinning the need for a carefully thought-out holiday budget.

Understandably, you may start wondering: Is my spending normal? Of course, everyone’s breakdown is different: The largest chunk of your 30% may go toward gifts, while your neighbor’s pays for super-sized lawn ornaments.

So to help you better keep your holiday spending in check, we asked three budget pros—LearnVest Certified Financial Planners™—to divulge how they divvy up their own seasonal expenses. Take that, temptation!

RELATED: 12 Clever Secrets to Keep Holiday Costs in Check

  • anon

    This year, I planned early, and propagated succulent cuttings from my garden, which is super easy to do, even with my brown thumb. I then planted them in cute but inexpensive (less than $1 a piece) small white pails, and tied them up with a festive ribbon and tag. They’re perfect little gifts for aunts & uncles, hosts & hostesses, etc. I’ve given a few out already, and people love them. I think a living plant they can enjoy all year is better than a little knick-knack, and everyone loves that they came from my garden.

  • ThomasPNitzsche

    Better Business Bureau and ClearPoint Credit Counseling Solutions partnered up for holiday budget planning tips, video and an interactive calculator at http://www.bbb.org/holidays Check it out!

  • john cartner

    Budget Planner is also a person which advice to plan for save money for
    future through online. Budget Planner gives plan for budgets such that
    we can create a budget for every month online.