This is something we often learn the hard way. Nothing puts a pit in our stomach like a big credit card bill in January and then looking around the living room and realizing we’re still making payments on the broken electric guitar that we just “had to have” last year. I have four young kids, and I’ve learned that what works best for us is setting some gift ground rules: Santa has to ask Mom and Dad if certain gifts are good ideas, Santa doesn’t wrap, and Santa only buys nice gifts for immediate family. Friends receive heartfelt cards and well wishes, and I try to also gift goodies without breaking the bank. This can come in the form of a good book or a unique craft or ornament from Etsy (some are even made by military spouses!). By focusing on meaning versus money, we’re able to stay within budget. One of my most memorable Christmas gifts came from my extended family in Sweden who made a modest donation in my name to provide school supplies to children in need.
Pre-planning will also help keep you on budget. For example, if I mail gifts to my overseas family I make sure to send the gift early and choose something light and inexpensive to mail.
Also, don’t be afraid to be honest with your loved ones about your budget. Oftentimes, asking siblings to chip in on a “Santa” gift or suggesting a family grab bag or Secret Santa gift becomes a win-win and eases everyone’s stress.
After the holidays, debrief about what worked and plan how you will save for the following year. For example, I want a larger artificial tree, so I’m going to add that wish to next year’s budget. Now when I look at my smaller tree I feel excited by the anticipation of next year instead of feeling stressed by a big bill from an impulse buy.