How should I prepare my holiday gift buying budget?
Set a budget that you can realistically pay in a short time period. For example, if you want to be free of holiday debt by the end of February, figure out how much you can spare from your regular budget from now through the end of February, and make that your holiday gift buying budget. Remember that the debt will be around long after the gifts have been given, (and possibly forgotten) and that extravagance should be less the point than thoughtfulness in gift-giving.
While you’re in the budgeting mode, start saving now for what you want to spend next year, so that you are ahead of the game. Going off the previous example, if you pay off your holiday budget in February, keep saving March forward so you will have a nest egg. Some employers even offer a Holiday savings plan where employees put away small amounts from each paycheck into a savings account. Then, when they want the funds, they simply ask for them. If your employer doesn't offer this, you can still do it yourself with a separate savings account at the bank. Similar to stashing away cash for an emergency fund, do it for Holiday spending.
“Each year I pull my list of what I spent the year before and use that as a basis to prepare my holiday budget. Each year I try to cut a little from the spending of last year by getting creative with my ideas and the timing of when I purchase items. If you did not track spending by person in the prior year, start this year and keep a record. Not only will it help you see what you give people each year, but will help for next year's giving season. I have been doing this for 6 or 7 years and the information is always helpful (it keeps me from giving my father-in-law the same type of present every year as well!).” – Lauren B. Foster, CPA.CITP