Hack My Holiday Spending! How Can I Keep My Out-of-Control Budget in Check?

Hack My Holiday Spending! How Can I Keep My Out-of-Control Budget in Check?

You’ve no doubt heard it time and again: It’s the most wonderful time of the year!

But to me, the holidays can also be the most stressful — at least financially speaking.

From the trimmings to travel, my household’s holiday price tag is pretty hefty — especially since we celebrate both Christmas and Hanukkah.

My husband, Jake*, and I buy gifts for Hanukkah, which we celebrate with his family — and another round for Christmas, spent with my extended family.

Add to that end-of-year tipping, plus trips with our sons Casper*, 3, and Eli*, 1, to see their grandparents — and we typically shell out about $4,000 for seasonal expenses before New Year’s rolls around.

As you can tell by that figure, the holidays are a big deal in our house.

But I recognize that just because we can spend that much doesn’t mean we should—and I think it may be time to rein in that number, with some help from Natalie Taylor, CFP®, a financial planner with LearnVest Planning Services.

And regardless of what your own seasonal spending looks like, you too can consider adopting some of Natalie's tips when making — and checking twice — your holiday budget.

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A Look at My Holiday Spending Habits ...

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When I was growing up, my parents were pretty frugal, but Christmas was the one time of year that they allowed themselves to splurge — so much so that my best friend always joked about being jealous of my “millions of presents.”

Now, as a married mom, I know the holidays are more about sharing family traditions, giving to the less fortunate and spending time with loved ones.

Still, I feel guilty when I don’t give people gifts — especially since we can afford to do so.

Between my job as a freelance writer and Jake’s job as a sales executive for a marketing firm, our take-home pay after taxes, health insurance and retirement contributions typically falls between $12,000 and $13,500. And we’re good about living within our means, so we rarely use up our monthly income.

Since we know our holiday spending won’t put us into a debt spiral, we’ve been willing to dish out extra for things like annual photo books for the grandparents.

That said, there are times when I personally feel the holiday pinch.

For instance, to keep our gifts to each other a surprise, Jake and I use money from our individual accounts to pay for each other’s presents.

Because his personal flex expenses are less than mine (I blame my highlights and clothing tab), he always has enough cash on hand to pay for his gifts. He likes going all out, so I suspect he spends at least $700 each holiday.

I, on other hand, spend about $300 to $400. But I never have that amount in my solo account at once, so I end up having to charge it, which usually takes me the first three months of the year to pay off.

We also spend several hundred dollars a year on things like gifts cards and fruit baskets for cousins, aunts and uncles, and in-laws — and probably about $800 on travel to see them at the holidays.

And, of course, there’s the price of keeping up holiday cheer: pine wreaths and stockings for the home, as well as tips for all the people who keep our everyday lives sane, including our mail carrier, housekeeper, babysitter and garbage collector.

Some of these costs we just accept that we’ll be paying each year, but I know others could definitely be pared back.

Plus, I can’t help but feel we could be spending our money more thoughtfully, or at least planning better in advance so those seasonal costs don’t hit us all at once.

RELATED: 5 Ways a Holiday Savings Account Can Help Save Your Budget

What the Financial Planner Says About My Holiday Spending Habits ...

“My biggest initial thought is that it’s great you have your arms around what your spending looks like — because a lot of people don’t,” Natalie says. “And that really gives us the information we need to make a plan.”

For starters, Natalie says, the time might be ripe to set new parameters for how our families do presents.

“If your family is getting too big to buy small presents for everyone, consider a gift exchange, or create a rule, such as ‘We’ll only give presents to the kids,’ ” Natalie says. “In lieu of gifts, you can also consider giving donations in each other’s names.”

For Jake and me specifically, Natalie suggests we decide on one “splurge holiday” each year for which we allow ourselves to get a big gift for each other.

“The splurge holiday could be Christmas, but it could also be Valentine’s Day, birthdays or your anniversary,” she explains. “Just be sure to keep it to one per year, and consider a price limit on the non-splurge holidays.”

As added motivation to trim our hefty annual holiday tab, Natalie suggests thinking of our spending in terms of financial trade-offs. For instance, smaller gifts or fewer decorations now could mean a lavish 10-year anniversary trip later.

“Even if we don’t cut a penny, Natalie notes that we can make our end-of-year spending feel more manageable by opening a non-monthly savings account.”

“Even if you can afford the holidays, there’s always room for a trade-off,” she says. “If you have three other things that are more important than holiday spending—like saving for college—then find ways to decrease that spending.”

And even if we don’t cut a penny, Natalie notes that we can make our end-of-year spending feel more manageable by opening a non-monthly savings account.

That’s an account that can be used specifically to cover costs that don’t occur every month but do have to be paid every year — think insurance premiums, quarterly tax bills and yes, even holiday spending.

To cover our $4,000 tab by the end of the year, Jake and I could open a non-monthly savings account into which we’d automatically put $334 a month, an amount that could easily be drawn from what’s left over in our joint account after our monthly bills are paid or saved by trimming a few flex expenses.

What I Think of the Advice ...

The suggestion to gift charitable donations strikes a chord with me, because giving more to charity has been a goal of Jake’s and mine for a while — but the year-end spending crunch always seems to put a damper on our philanthropic desires.

This way, however, we can kill two birds with one stone: We’ll be able to give to a good cause and also get satisfaction from knowing our gift has a deeper meaning.

I’ve already started thinking of nonprofits that could work: A cousin of mine who loves horses, for instance, might appreciate a donation to an animal-rights organization.

I also like the idea of creating a non-monthly savings account and plan to discuss it with Jake, so we’ll be ready by next year’s holiday season.

In the meantime, however, I’ve set one up for myself, diverting about $40 a month of my personal money into it for gifts. And I actually think I can contribute more if I take a closer look at my personal spending — maybe cutting back on my fitness and clothing expenditures.

The larger discussion of changing our philosophy on gifts may take some time to ease into, since we both take joy from being able to splurge on our loved ones. But I’m also seeing it as an opportunity to start some new traditions that’ll hopefully be kinder to our budget — without losing the holiday spirit.

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*Names have been changed.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Unless specifically identified as such, the individuals interviewed or otherwise listed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services and the views expressed are their own. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.

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