Last Christmas was, to be quite honest, the first Christmas in our four years of marriage when I was completely prepared financially. My husband and I began our marriage with medical debt after an emergency surgery and have been actively becoming debt free ever since. Because of this, there hasn't been much room to breathe for the holidays. So, when last Christmas rolled around, I was curious to see what our holiday budget would be, and how to come out unscathed when the new year hit! I learned quite a bit and am ready to arm you for budget battle too. Even if you don't know how much to budget, use these tips to prepare for next year during all of 2015, (and remember to stockpile the items listed)!

1. Work woes

My husband works a corporate job, so that comes with expenses of its own. Gifts for coworkers, opportunities for giving, secret Santa, and holiday parties…suddenly dollar signs were popping up. We dealt with the first category by simply setting boundaries and keeping them. We politely declined group gift exchanges, and gave homemade gifts for superiors and his three closest work friends.

Gift wisely

I went to Costco, bought a giant bag of white chocolate pretzels, and split them up into food-grade "takeout" boxes that I found at the craft store. I cut out little sparkly initials for each recipient, and voila! The total cost for six gifts was $9.98 (including boxes, initial cutouts, pretzels and note cards). We chose to give to the charity his work adopted during Christmas, which was to help give cold weather items to children in need. I purchased gloves and hats at Old Navy on clearance, used a coupon, and paid just $6.00 for six sets of hats/gloves (they are typically $5 and under during the holiday season).


Have a gift stockpile

We also brought a gift to the holiday party exchange, which was a collection of Bath & Body Works items I had stashed in my gift closet earlier in the year. Bath & Body Works typically does one promotion every other month where you can get a free item without purchase. I store these year round in my stockpile.

Learn more about stockpiling gifts with 7 Tips for Building Your Gift Stockpile!

2. Frugal food

Last year, I had no idea how to budget for holiday food. I hadn't thought about the extra expense, but with several parties and events to go to, I could tell food was going to be a budget breaker.

Use your food stockpile

I began recording the amounts of each party/event in a notebook, and how much we needed to buy. I had lots of soda stored up in my stockpile, so whenever there was an event I needed to volunteer an item for, I signed up for drinks whenever I could. I combined juice and Sprite from my stockpile, for a really nice punch for each event. I stockpiled M&M’s, mini candy bars, baking chips (so cookies could be quickly made) and baking mixes. I was able to whip up inexpensive baked goods to bring to parties, rather than stopping for pricey store-bought ones.


Plan for last-minute needs

When you're making your list of upcoming expenses, plan for the unexpected. I was asked to pick up bread, Parmesan cheese, condiments and ice on our way to parties throughout December last year! I know now to budget a little for those expenses, so I don't leave a host or hostess in a bind either. I also stockpiled tea, candles, hand towels (you can snag solid color ones mixed in with Halloween and Easter clearance items), mugs and soaps for hostess gifts. I didn't buy any small gifts last year thanks to my stockpile!

3. Giving goals

A lot of organizations would love our financial attention during the holidays, and it's hard to be unemotional when so many causes are wonderful. How do you make the choices?


Stick to your goals

My husband and I sat down before the season started and we decided where and when we would give. I always allow my daughter to put money in the Salvation Army buckets, but we plan for all other donations. Last year we chose to give to our church, Operation Christmas Child (which gives boxes of gifts to children in third-world countries), and to a community outreach program that helps the homeless. It was incredibly hard to say no to the other worthy things that popped up, but we tried to be good stewards—and be wise—while also being generous. For us, we want to be debt free before we’re able to give freely. For now, that means giving what we can, but also planning ahead.

This year, we’re heading into Christmas with a clear picture of the expenses we had last year. I have a line in my notebook for each unexpected expense we had last year, and since our season is looking similar, I’m ready to go!

This is a guest post by Grace from Medford, OR. 

How to Budget for Unexpected Expenses During the Holidays