How to Create a Christmas Gift Budget

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Creating a budget for your Christmas gift shopping isn't as difficult as it sounds. The hard part is actually sitting down and doing the work.

Some tips before we look at the actual process. First, don't be afraid to make changes to the budget as you go: Just avoid making changes at the store because you can't resist that perfect and expensive gift. Second, hang on to a copy of your budget for next year.

1. Use a spreadsheet
The web is filled with free worksheets and spreadsheet templates for making a budget. A Bing search is all you need.

2. List the people for whom you need to shop
List everyone, including friends, family, teachers, pets and the postman. List the "must buy" and most important gifts first. Include hostess gifts and two inexpensive "emergency" gifts.

3. Decide how much you can spend
Review how much you spent last year. Look over your finances and decide exactly how much you can afford to spend on gifts. Cut it by 10% for unexpected expenses. This is your targeted total gift budget.

4. Assign an amount to each person
Total up this figure and make adjustments to reach your targeted figure. Don't forget to include materials for homemade gifts.

5. Brainstorm ideas
Write down possible gifts for each person, making sure the cost falls within the budget for their gift.

6. Track your spending
Take a copy of the worksheet with you while shopping and note the actual gift purchased and how much was spent.

7. Make adjustments
If you ended up spending more on one gift than you anticipated, cut back the budget for another gift to keep things balanced.