Planning a Budget

December is a month that often times people find stressful. Before you know it, Christmas is suddenly around the corner and you are dreading the season because you don't think you will have enough funds to cover the things that you deem as expected.

Let's take a step back for a minute. What is Christmas anyway? What is it about? For me, Christmas has always been about a magical time where peace exists on Earth. The season is about giving and spreading holiday cheer. Hold up a minute! If Christmas is about these things, why do I need to plan a budget?

Yes, while Christmas is about giving and spreading cheer, things you can do without spending any money, some people get joy from shopping for people on their Christmas lists. The look on the kids' faces as they open up their gift is priceless and a great way to spread holiday cheer.

December is the time of year a lot of people get extra excited and throw everything they have ever learned about finances completely out the window. Retail stores know this about people and use it to their advantage. This is typically the time all the stores have great sales. You see that new iPad you have been wanting and grab it because you don't think the deal will come back around. Next thing you know, you see an adorable reindeer decoration in a display window and suddenly become the proud new owner of an entire Christmas display. All of these impulse buys add up.

This is where creating a budget for the holidays comes in. Having a budget and sticking to it will help to reduce the amount spent on impulse buys and ensure you don't go into debt this holiday season. Creating a budget is easy once you understand why creating a budget will help you. As soon as you can separate your emotions from the process, you will be ready to go.

In order to get started with your budget be sure to grab something to eat and drink. This will help your brain stay focused. Be sure to take a couple deep breaths and really understand that this will help you out. Maybe it will help to keep your emotions out of the process by imagining you are helping someone else out and this financial situation does not pertain to you. Separating your emotions will help you to remain honest with yourself.

Once you are ready to begin, plan to spend one to two hours creating this budget, depending on how organized your finances are when you start. The first thing you will want to do is figure out how much money you will be earning from now until the last paycheck before Christmas. If you have set hours, this should be fairly easy to do. Here you can add up the total number of hours you will be working up until your last pay period before Christmas. Then you will multiply by your hourly wage. However, if you do not have set hours, the process is a little more time consuming. This requires estimating your average hours worked per week. Once you figure that out (be sure to estimate low) the process is the same as above. Count how many weeks there are until Christmas and either add all of the average hours together or multiply by the number of weeks until Christmas. Salaried workers should be a little bit ahead in this step, but may need to do some addition depending on how far in advance your are trying to plan your budget. Finally, deduct 15 percent from the entire amount for taxes. This amount is high, but it's better to be on the safe side.

Next, write down all the bills you owe every month. For example, your phone bill, car payment, car insurance, rent, et cetera. Once you have these written down, be sure to cross out the ones you have already paid. If you are planning this budget before December be sure to add all the bills together for each month you have. Now that you have completed the amount of bills you owe, be sure to subtract the total number of bills from the total amount of your income.

Now that you know how much spending money you have, you are ready to create your holiday budget. If you did not include food or activities that you would regularly do into your bills, now is the time to add a section for those things. Then figure out all the people you want to shop for. It might help to write down a list of everyone's names and if you know what you are going to get them you can write down the cost of those items. Or maybe you like to make gifts for everyone. In this case, write down the cost of the materials for what you will be making.

Remember earlier when we were talking about impulse buys? Now is your chance to plan a certain amount of money for the cute little things you find in a display window. Even if you think you have self-control and won't want to make any of these impulse buys, still plan some into your budget just in case. Also, take the time to look at the costs of any seasonal activities you might like to participate in. Don't forget to add gas and parking to any of these winter activities. Then plan on extra as well. Finally, plan some extra expenses into your gift budget in case anything comes up.

Finally you are all set with a budget to help relieve your financial stresses for the holidays. When you start shopping, bring your list with you and be aware of your budget. Taking a calculator to the store with you will be helpful as well. As you are placing items into a basket, add the price into the calculator. Look for sales and coupon discounts to help you stay under budget. A lot of places will price match, so if you know what you are buying in advance you might want to check out major competitor ads and bring them with you. Congratulations! You are now ready to enjoy a holiday season free of financial worry!