Why it’s time to plan for next Christmas

Christmas is expensive. Here’s how to make it more affordable without necessarily holding back from what you want to do.

Millions of people are deep into the Christmas season by now. Decorations are up or going up soon, shopping is either in full overdrive or about to be, and travel plans have been made (hopefully).

For many, it’s a very stressful season, for all the reasons.

I hear from clients all the time that December is a really challenging month, financially. And on the surface, that makes sense. Gifts cost money, and it’s probably the most expensive time of the year to travel. Very few people’s December is an easy one (unless you opt out of holidays).

Which is why, you might be surprised that I want you to think about Christmas…Next Christmas.

Because now is actually the best time of the year to start planning for next year.

Stay with me, and you’ll see it’s not as crazy as it sounds.

(And while I’ll be speaking of Christmas throughout, the same could be said for Hanukkah or any other December financial challenge. Case in point, I myself have never celebrated Christmas. Regardless, you can use the same tips no matter what holidays you celebrate, and even beyond holidays in general.)

Next Christmas

How do you climb a mountain? One step at a time.

And how do you afford one of the most expensive times of the year? By starting a year in advance.

I’m writing this in December, so it’s time to start planning for next December.

How much are you spending this year?

This year isn’t a predictor of next year, but it’s a good place to start.

We can divide holiday spending into a few different categories. Here is how I’d subdivide it:

• Gifts
• Travel
• Miscellaneous (decorations, parties, etc.)

What you want to do is figure out how much you’re spending in each of these categories this year. If you don’t have a firm grasp of how much money you’re planning on spending this year, you can wait until the month is over and tally everything up then.

Look at your credit card statements, bank statements, receipts, whatever you have. The goal here is estimation, not perfection.

Month by month

Once you have each of those holiday spending categories, ask yourself if next year is likely to be the same as this year or different? As in, will you be doing the same kind of travelling, or more/less? Will you be spending the same amount on gifts, or less/more?

Come up with reasonably good numbers, and divide by 12.

Why 12? Because it’s the number of months until next Christmas.

If you already know what you’re planning on spending next year, then you might as well plan for it today.

Example

Let’s say that you and your partner typically spend $500 on gifts. You typically fly across the country to visit your relatives, so that’s roughly $1,000 each for plane tickets. And this past year, you ended up spending $100 on decorations and $100 for a holiday party.

So you’re looking at $2,700 for next Christmas.

$2,700 divided by twelve is $225.

So, starting in January, you want to put away $225 each month into a savings account or other place that’s bucketed off from the rest of your funds.

If you do this every month (automating it is best), you will have all the money you need come next December.

You will have paid for Christmas without breaking a sweat.

Pushback

The most obvious pushback I get against a plan like this is:

“But I don’t have that much money in my budget each month to put it away!”

This is a curious statement, because it all but invites the most obvious of responses:

“Then how are you going to have it all to spend in December?”

The answer, of course, is that they will put it on a credit card. Happy holidays; here’s more debt.

If you can’t put all of it away, how about putting some of it away? If not $225, how about $100? Or how about $50? $50 a month is $600 at the end of the year. That’s not nothing.

Your choice

I’m not going to tell you to stop celebrating the holidays the way you want to if you can’t afford it. More to the point, I’m telling you that there are ways that you can afford it. It just takes a little planning, and not even that much.

Next year isn’t going to be a surprise. Christmas is always in the same place on the calendar. You know what’s going to happen.

So plan for it.

And in the meantime: think how amazing it’s going to feel when you can just outright pay for your entire Christmas needs without any worry.