A holiday budget you'll still be following in December

Nobody ruins their holiday budget with one purchase. It's a gift for a cousin, then a sale you didn't plan for, then food for the gathering, then a ride to the airport, then the wrapping paper you were sure was in the cupboard. In January the total arrives all at once, and it's never the number you'd have guessed.

Step one: pick a single number

Before you think about who gets what, decide what the whole season can cost. Base it on what you can pay without carrying a credit card balance into the new year.

A quick way to find it:

1. 1

   Count your paydays

   Work out how much you can put aside from each payday between now and the end of December.

2. 2

   Add what's already saved

   Include any holiday savings you already have, and any year-end bonus you're sure of. Leave out a bonus you're only hoping for.

3. 3

   That's the ceiling

   The total is the most the season can cost. Everything else in this guide is about staying under it.

If the number feels small, that's useful to know now. It's much worse to find out in January.

Step two: split it into categories

Gifts are the obvious cost, and rarely the only one. Divide your number across whatever applies to you:

• Gifts: family, friends, colleagues, teachers, godchildren
• Food and hosting: the big meals, parties, baking, drinks
• Travel: fares, fuel, rides, someone to mind the pets
• Going out: work parties, dinners, gift exchanges
• Decorations and wrapping
• Giving, if charity is part of your season

Then keep back a small "oops" amount, around a tenth of the total, for the things nobody plans: the gift you forgot, the invitation that came late, the lights that stopped working.

Step three: give every name a price

Write down everyone you plan to buy for, and put an amount next to each name. Add them up.

If the total is bigger than your gift budget, you have three options:

• lower some of the amounts
• shorten the list
• suggest a gift exchange or Secret Santa for big groups, so everyone buys one better gift instead of many small ones

A price per person also makes shopping easier. The question stops being "is this a good gift?" and becomes "is this a good gift for the amount I set?", which is much quicker to answer.

Step four: use the sales, on your terms

The big sales can save real money, as long as what you buy was already on your list.

• Shop from the list, not the homepage. A large discount on something you didn't need still costs money.
• Check the price history. Some sale prices are the normal price. Price tracking sites and browser extensions show what an item has actually sold for over recent months.
• Unsubscribe from shop emails until January. Every "ends tonight" email is there to get you to spend.
• Count the delivery fee. It can cancel out the discount.

Step five: track it as you go

This is where most holiday budgets fail. You set the numbers in October, then stop looking.

Record each holiday purchase when you make it: what it was, which category, how much. Before the next purchase, check what's left in that category. If one category runs over, take the difference from another one, not from next year.

In Cashmonki you can make a budget for each category, Gifts, Travel, Food, with a limit, and watch how much remains. Budgets run by month (or week, quarter or year) rather than by season, so split your holiday number into November and December and set a monthly limit for each. Logging a purchase in the queue takes one sentence with the Ask chat: type "gift for Mia 25" and confirm the card it shows you. Or photograph the receipt and receipt scanning reads the merchant, amount and date for you.

If you're travelling home or buying from shops abroad, multi-currency tracking keeps each purchase in the currency you paid in and converts it for your totals.

Plan for January while you're at it

The first weeks of January tend to bring every bill at once. While you're making the budget:

• check which subscriptions or yearly fees renew in January
• leave room for your normal January bills, which don't pause for the holidays
• set a reminder for the first working day of January to look at what the season really cost, so next year's number starts from the truth

For the subscriptions part, see how to find subscriptions you forgot you're paying for.

Where a holiday budget breaks

• It only works if you record as you go. A budget you check once in December is a history lesson, not a budget. If recording every purchase sounds unrealistic, track gifts only, usually the biggest part of the season.
• Shared costs get messy. If you split a family meal or a group gift, agree who pays what before anyone pays anything. Cashmonki is a personal tracker with no shared budget, so each person records their own share.
• Some costs really are unknown. Travel prices move and invitations arrive late. That's what the oops amount is for. If it runs out, cut a category rather than going over the total.

The aim isn't the smallest possible holiday. It's a season you chose in advance, that doesn't send you a bill in January you didn't see coming.