The gift budget...

I love to give presents, thus no surprise I LOVE Christmas!!! My big problem with Christmas is that I spend far too much money, charge it because I don't have the cash, and am always in a huge rush to get my shopping done so sometimes gifts are not as thoughtful as they could be.

To combat my Christmas issue (and other gift giving times of year) I implemented the "gift budget" this year. To make the gift budget, I used Excel but you could take any sheet of paper (old napkin, whatever). Write down who you need to buy for this year including birthdays, christmas gifts etc. Don't forget your own kids, spouse or parents. Put an amount that you think is reasonable to spend for each person. Add a buffer for weddings, housewarmings, babies, and bridal showers that just spring up (I budget 3 of each) or ones you already know about in the year. Add up the amount you intend to spend in the year, divide by 12 and include this amount in your household budget for the year. If it doesn't fit in your budget you need to pare down on your gift buying intentions.

How the system works:

Having the money when you need it: You will actually be saving for the holidays and other events before they happen. No charging.

Being cognizant of your spending and on what: Having the budget has helped with not only decreasing what I spend on gifts, but I have actually had more thoughtful gifts because I know I have the money to buy them whenever I see something I like (and I think about it every month), as opposed to rushing out the day of and buying the first thing I can find (regardless of cost).

"Budget Wins": In some cases (more and more frequently as you get into the idea), you will be able to come in under budget for items on your gift list. I call them "Budget Wins." You have a few choices in this matter. a.) Do nothing and keep the extra money in the account for overages (see below); b.) reduce your payment next month by the amount of the win freeing up some cash flow; c.) reduce your payment in December. This one is really nice, since if you keep "winning" in your little budget game you may not have to make a payment at all in December making the holidays much easier. See tomorrows post for easy ways to make "wins" in your gift budget.

Overages: Sometimes $20 is just not enough to get that china cat you know that Grandma will love, this is where your decision making comes in. You can either a.) use up your existing "budget wins" if you have decided to not adjust your payments or pay the difference from your own spending money. This may make you think twice about the gift.

Getting Better: Make sure you note on your budget what you actually spent on a gift to identify wins and overages. In the following year you can tweak your gift budget to be more accurate.

Miscellaneous Items: I mentioned slotting in money for random (or planned) weddings, babies, etc. If some of these events don't seem to be occurring, (ie. it's mid October with no pending babies on the horizon, reduce your payments in upcoming months (or December) to offset the lack of need.

Stats - no change