Peanuts Christmas Panorama

(image credit)

The holidays are here, and we all know what that means: Overspending!

But why? Why does it always happen? Why, when we know full well that we have X to spend, do we go and spend more? We’d prefer to think that it’s a terribly complex thing (because then we could be forgiven for not getting it right, right?)… but the truth is quite simple: it’s an emotional time.

It’s a time that rekindles at least some of the magic of childhood for pretty much everyone and, well, probably floods your system with too much serotonin. Point being, it is widely understood that emotions make for bad spending habits, and during the holidays we all tend to indulge in emotional impulse spending.

The good news is that it doesn’t need to happen again. You can take control now!

Use the Pocket Budgeting Worksheet and the tips below to help you with the *not to overspend* part.

Fix the holiday spending trend (and avoid the mid-January blues) by sticking to these three simple rules:

  • Be Realistic
  • Fail Small
  • Be Informed

Let’s look at each of those briefly, and at how the Pocket Budgeting Worksheet can help you…

Be Realistic

Understand that it’s the holidays, and that you’ll be wanting to spend money on different kinds of things. Your time will be spent differently and that will have an effect on your money spend also. Perhaps you’ll be going away on holiday, so consider freezing some consumer services for a month (e.g. Netflix, Satellite TV, etc.) and then reallocate those funds to the holiday pocket. Or perhaps you’re staying at home this year, so it might be realistic to cut on your fuel spend in order to spend more on presents or entertainment. Be realistic and consider your unique situation and how you might best prepare.

Fail Small

If you simply put an allocation of $500 towards “Holidays”, you are almost guaranteed to fail miserably. Break the holidays down as best you can into small chunks (e.g “Family visit”, “Weekend at the beach”, “Presents”, “Boating/Fishing”, etc.) and then allocate smaller amounts to each. If you have a small budget (say $100 for a weekend away) you’re much less likely to overspend by a large amount. Plus, smaller budgets make estimation and planning more accurate, too.

Be Informed

Keep your budget and your remaining funds up to date throughout the holiday period. Update at the end of every day and be sure that you know your remaining available amount before you head out the door each morning. If you overspend at some point, choose from which of the future spends you’ll subtract the now-unavailable amount so that the rest of your planned events will still be enjoyable. This way you’ll find that you still have that $50 you’ve put aside for New Years’ Eve, when the 31st comes around!

Putting it into action

First off, if you haven’t done so already, make sure to *grab your copy from here* and to follow the steps in *this article about how to use it* to set it up.

Then, make a pocket sheet called “Holidays” (or something similarly creative) and link it to the appropriate account. The (linked above) “how-to” article will teach you how all of that is done.

The difference with this special pocket is best illustrated by example, so consider this screenshot and the bullet points below:

  • As I mentioned, there isn’t an overall “Allocation” amount
  • Instead, add a few separate budgets that you’re planning for, with individual allocations in the “In” column
  • The amounts still add up to an overall “Remaining” amount, but individual items can be expensed against by recording spending in the “Out” column of the appropriate rows (e.g. “Weekend with the folks” and “Trip to the zoo”)
  • It is quite clear from the “Calculation” column on the sheet where the spend of individual items is above or below the planned amount
  • Unplanned or ad-hoc items can also be added to the sheet (e.g. “Lunch at McDonald’s”)
  • Note that the “Remaining” amount is simply the remaining allocation, and as per normal operation of the Pocket Budgeting Worksheet, you’ll need to update the associated bank account sheet with your real balance in order to track that what you have available can still cover this “Remaining” amount
  • If you overspend and don’t have available funds to cover it, you should reduce the remaining planned amount on this pocket sheet, either by reducing one or more of the planned amounts (“In” column), or adding spending against them (“Out” column)

Wrapping it up

So there you have it, done-and-dusted ready-to-go Holiday Pocket Budget. I sincerely hope that it’ll help you to avoid the typical January budget hangover!

Take care, have fun, be safe, and Happy Holidays!