SOLVED: The Christmas Budget You've Always Wanted...Courtesy of Dave Ramsey

In the classic Christmas movie Home Alone, Kevin McCallister made a blueprint for how he was going to take down the intruders in his house. He knew all he needed to outsmart the Wet Bandits was a plan of attack. A little glue here, some glass ornaments there—and a couple of swinging paint cans for good measure.

What’s our point here? Well, just like Kevin McCallister, you need a plan. And a Christmas budget is that plan. It will lead you to success, but only if you follow it!

While it’s perfectly okay to spend extra money around the holidays, you don’t want to end up with the unwelcome gift of credit card debt come Christmas morning. That’s why you need a Christmas budget. Creating the right Christmas budget really starts with having the right household budget in place. We recommend using a zero-based budget for that. Here’s a quick refresher:

What Is a Zero-Based Budget?

The concept of a zero-based budget is simple: Income minus outgo equals zero. If you earn $3,000 a month, you want every dollar you spend, save, give, or invest to all add up to $3,000. That way you know where every one of your dollars is going.

How to Create Your Christmas Budget

1. Take a look at what you spent on Christmas last year.

Let’s go ahead and address the question on everyone’s mind: How do you figure out your Christmas budget? Take a look at what you spent on Christmas last year. Was it too little, or too much?

This is where our free EveryDollar app really shines. Start by plugging in your normal monthly expenses like gas, utilities, insurance, and groceries. Then, enter your more flexible spending budget groups, like dining out and fun money. What’s left? Will that be enough for Christmas? If not, you may have to adjust some of that flexible spending to make it work.

If you typically spend $300 on restaurants in a month, why not cook a few extra meals at home and stash an extra $200 toward Christmas savings? Or if your fun money is sitting pretty at $150 a month, why not hold off (temporarily) and put an extra $100 into your Christmas fund? Smart budgeting now can free up more money for what you want later—like Christmas presents!

Read the other tips at DaveRamsey.com



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