I love Christmas. The tree, decorations, stockings, presents, carols, turkey, and cranberry sauce—I could go on and on. I love it all.
While I loved Christmas, the credit card companies loved me. I would charge my way through the season and live with the debt afterwards. It would then go on to impact every part of my life for the next 12 months.
So when we started our first YNAB budget, I wanted to stop this annual Christmas debt once and for all.
Here’s how I did it.
Year 1: No Debt, But Still Limping
When I set up my YNAB budget, I made sure there was a Christmas category right away. Each month we would put money toward it. I was following Rule 2: Embrace Your True Expenses, and Christmas fit the bill perfectly as a non-monthly expense. I was banking on Rule Two to rescue us from Christmas debt.
That year, our Christmas spending was wayyy more under control, but we completely underestimated what Christmas actually cost us. There was a lot of moving money around to cover Christmas expenses.
The good news: January came and there was no debt waiting for us. Hurrah!
The bad news: we were still limping along months after Christmas was over because we had moved money out of categories like Medical Expenses, Auto Maintenance, or Clothing.
We could do better: time to drill down into more detail.
Year 2: Turbo Christmas Category
The next year, I created a turbo Christmas category group. There was a category for every person we bought a present for (including each other), feeding a crowd, decorations, fun activities, and even a category for mailing packages to those who weren’t with us in person.
Here’s what it looked like:
It takes up quite a bit of real estate, so I keep it closed and at the bottom of my budget for most of the year.
When we first started, it was a stretch to get the categories funded in time for Christmas because we started midyear, but every little bit helped.
The good news: again, no Christmas debt!
The good good news: no limping along in the months to follow. We did it!
Year 3+: This Works for Us
This feeling is here to stay! When January rolls around, we start fresh on our Turbo Christmas category group. This gives us a full 12 months to save for next Christmas and drastically lowers the amount we set aside each month.
Is our plan perfect? No way—and we didn’t expect it to be. But we adjust as we go along. If we want more money for fun activities, where are we willing to spend less? Decorations? Groceries? Now any Christmas overspending has to be covered by another Christmas category. it doesn’t overflow into the rest of our budget.
Here’s How to Set Up a Turbo Christmas Category Group
- Check how much money was spent on the previous Christmas (Heyo, YNAB reports!). This gives you a pretty accurate idea of how much you’ll need in this category group.
- Make a plan for that money, based on your priorities for the holiday (do you need flights this year? Do you want to host the Christmas dinner?). That will be a great conversation in and of itself—you figure out what’s actually important to you about celebrating the season.
- Once you know how much you want to save in every category, add a Target Balance goal to each item. This lets you forget the number you decided, as the budget will remember for you.
- When it’s time to budget, use Quick Budget to assign dollars. Just select the categories you want to budget for, click or tap on Quick Budget’s Underfunded number and you’re done.
This setup has truly brought us financial peace of mind when it comes to Christmas, and it’s created a stronger connection between our money and our priorities. I didn’t know this was possible, but now I love Christmas even more.
Quick Tips about Gift Giving When You Share a Budget:
Want to keep the surprise in gift giving? Here’s our strategy:
- We each get the same amount to spend on each other.
- We budget the money each month to a “His” Gift Fund category and “Hers” Gift Fund each month.
- It doesn’t matter how many gifts we give, we know we spent the same. Or maybe I cheated on the amount just a tiny, tiny bit, because I knew how much he’d love it.
- We often buy gifts on Amazon—which tells you nothing except the cost (it could be a lot of new socks or a new ottoman, who knows?!).
- We sometimes use a pretend Payee name like “Gift Purchasing Place.” This keeps gift giving incognito without interfering with importing or reconciling.
Want some hands-on help? Did you know we offer free live workshops on things like making a plan for credit card debt or how to reduce spending? You’ll be amazed what you can learn in just 20 minutes.
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