As I mentioned last year, Good Morning America recommended that your holiday budget be three times your daily income. Divide your annual salary by 52, then by 5, then multiply by 3. If you make $52,000 a year, you can spend $600 this holiday season.
Is Three Times Your Daily Salary Too Much?
However, with cutbacks and job losses, it seems that more people plan to spend much less than that. I’ve totaled my expected expenses, and including gifts, food for various parties, and holiday travel, we’re spending about $500. We could spend far more if we used the GMA budget, but that seems like way too much, especially since we don’t have kids. I recommended a more reasonable Christmas budgeting method last month.
What Is a Reasonable Budget?
Because it’s just the two of us and our gift list is pretty short, $500 seems reasonable. We’d probably push it closer to $1,000 if we had children or space for a Christmas tree. I could also see that budget climbing fairly easily if we had to fly, which we don’t.
When it comes to the holidays, you don’t want to seem cheap, but you also don’t want to face massive credit card bills in January. It can be difficult to balance the two, but doing just that is necessary to keep your annual budget on track.
Announcing My New Holiday E-Book
I’ve just published my first e-book, which is a compilation of 22 posts about saving money at Christmas. It includes a detailed budget worksheet that you won’t find on this blog. Use that to determine your true holiday budget beyond the big things like gifts and travel.
The e-book costs just $6. In honor of its launch, I’ll be giving away one copy to a lucky reader. To enter, simply post a comment below with a valid email address (only I will see that), or email me at Aryn (at) SoundMoneyMatters (dot) com. Entries close Friday at midnight Pacific time, then I’ll send the winner a free copy.