The end of the year can be such an exciting and joyous time between giving thanks and celebrating our faith. Yet, if we're not careful, the holiday season and the new year may also become a period of significant stress.

Overloading our calendars and not keeping our spending in check can dampen our festive spirits.

When we first think about budgeting for the holidays, money is at the forefront of our minds. But it’s essential to consider how we budget our time and energy too.

Here's a list of what to consider as you begin thinking about the winter holiday season.

How Much Can You Spend this Season?

To create a smart holiday budget, you’ll want to start by figuring out how much money and time you have to spend.

Available money

Add up your current savings and any earnings or bonuses you'll receive that aren’t earmarked for regular monthly tithing or expenses.

If that sum seems a little on the light side, brainstorm ways to beef it up over the next few months. Could you increase your income by working more hours at your job, getting a seasonal part-time position, or taking on a few paid side gigs to earn extra money?

You might also consider selling those new or gently used items you no longer need or use. And don't overlook the idea of regifting items. It can be a good possibility depending on the gift and who you plan on giving it to.

If you plan to use a credit card throughout the holiday season, make sure you have a concrete plan to pay it off in January to avoid interest charges. The savings from terrific sales aren't so great when you have to pay double-digit interest rates on your unpaid balance.

Plan Ahead: To avoid not having enough stashed away for next year's holidays, set up a sinking fund (previously known as a Christmas Club account) and send a little bit of savings to it each month with an automatic transfer. An online bank is excellent for this type of account because the money isn't as easily accessible as it would be at your local bank. This can help prevent you from being tempted to spend it on a whim. The online bank Ally offers account holders the option to set up separate savings "buckets" and ways to boost your balance in those accounts more quickly.

Available time

Open your calendar and take a good look at the days you have left before the holidays are here. How many days will you spend working? What days are already booked with events? How much free time do you have available? Will you have some paid holiday time or PTO? 

While the holidays always seem like a hectic time, mapping out the "free" time you have between now and the first end-of-the-year celebrations can be an eye-opening exercise.

Once you know how much of your valuable time and money you have to spend, now you can consider what you’ll need to put those resources toward.

What Holiday Expenses Can You Expect?

The next step in holiday budgeting is estimating your time and money expenses.

Financial Expenses

According to the National Retail Federation (NRF), shoppers plan to spend nearly $1,000 on average during the holiday season. Spending on gifts accounts for $650, while food, decorations, and other non-gift items make up $230 of their holiday budgets. Other holiday purchases for themselves or family members come in at $117.

While you might be thinking $1,000 sounds about right for what you plan to spend this year, others may expect to spend drastically higher or lower amounts. But don’t make the mistake of ‘guesstimating’ your holiday expenses.

You won't know for sure how much you expect to spend until you make accurate lists of all the potential expenses for the winter holidays this year.

First, make your gift list. Jot down the names of everyone you would like to provide a gift to. Next, set a spending limit for each person on the list. Finally, rank them in order of how important it is to you to present them with something.

The next list you'll write out should include all other holiday items and their estimated costs, such as:

Now, total up your potential holiday expenses.

Forgetting to include the cost of a small gift or two or what you’ll spend on updating a few decorations probably won’t bust your budget. But even with a well-thought-out list, you may be surprised how many expenses you didn’t anticipate or failed to plan for.

Time & Energy Expenditures

Before planning dinners, arranging get-togethers, or accepting party invitations, make a list of all of your potential events and time commitments. This includes holiday shopping, work parties, or the annual end-of-year family vacation.

Then, take your list and block out those times on your calendar. The “free time” you identified above may fill up quickly with all the tasks and events you know you want or need to accomplish.

Your list could include:

With thoughtful reflection and planning, you’ll have a much better idea of the amount of time and energy you predict you’ll spend.

Create Your Holiday Spending Plan

Now for some moments of truth, compare how much money and time you currently have available to spend against the potential holiday expenses you identified.

Can you cover your estimated holiday expenses with your current savings and your next paycheck or two? Or will you need to find ways to earn some extra cash?

While using a credit card might be an option, we suggest doing everything you can to avoid taking on holiday debt you can't pay off early next year.

Set Your Financial Budget

As you prepare your shopping list, remember you don't need to give extravagant gifts. Perhaps, last year's holiday outfit and decorations will do just fine this year too.

Small, thoughtful gifts, handmade items, home-baked goodies, and gifts of time or service can be more heartfelt and appreciated than expensive gifts or elaborate parties.

You can spread and enjoy the holiday cheer without accumulating credit card debt, even on a tight budget. Accomplish this by using your imagination, remembering the reason for the season, reflecting on what brings the person you’re gifting to joy, and doing some careful planning.

Set Your Time/Energy Budget

Like prioritizing your gift list, you should also prioritize holiday events and activities. Some will be absolute musts, while others will only be added to your calendar if you genuinely have the time and energy to devote to them.

You’ll have to learn to say no. This is where blocking off some self-care or downtime on your calendar can pay off. If saying no is usually a struggle for you, having a "rule" of one day "off" each week or only attending "one event/holiday activity per weekend" is beneficial.

You probably know what it feels like to spend too much on gifts and expenses and experience a hectic and overwhelming holiday season. So, why not try sticking to a time and energy budget in addition to a financial one for one year to see if after the season you feel any better?

Holiday Budgeting Tips

Using some or all of these tips can help make this year an affordable holiday season for you and may just help your extended family and friends save a little money and time. You can do this without having to leave someone or something special off your holiday list or entirely skipping special holiday traditions.

To Avoid Overspending Your Money

Track your spending - Use a budgeting app, spreadsheet, or notebook to track everything you spend on holiday items. This will make it easier to adjust your budget and spending if you find a great deal on one or two gifts, decide you don't need more decorations for the tree, or want to add someone to your gift list.

Pay with cash - Unless you use credit cards to earn rewards and routinely pay them off every month, consider using cash when shopping this season to avoid overspending.

DIY gifts - Brainstorm a list of ideas, from things you can make to something you can do. You have the option to present the physical items during the holidays or create a gift “coupon” redeemable at a later date. Here are a few ideas to help inspire you:

Also, try your hand at making some of your own holiday decor!

Ask others to pitch in - Your traditional extended family dinner could become a potluck this year. A party with friends could be a "bring drinks and snacks to share" event. Borrow party decor or serving items from neighbors for events you're hosting in your home instead of buying your own.

Reconsider gifting - Instead of exchanging gifts with everyone in your family, group of friends, or coworkers, try a secret Santa or white elephant gift exchange. You could also ask your family/friends/coworkers to donate time or money to charity or adopt a needy child/family versus exchanging gifts with each other this year.

Shop smart - For holiday savings, don’t procrastinate and plan to shop sales on Black Friday, Cyber Monday, or during other savings opportunities. Use coupons, rewards programs, or online apps, to save more. Sign-up for email discounts some online retailers offer and shop thrift stores for holiday decorations or attire.

Bonus tip: Skip buying gift cards - unless buying for yourself at a discount -  because many don’t get spent!

To Avoid Zapping All Your Energy

Use your calendar - Don't accept an invite, head out on an impromptu shopping trip, or start planning another party without checking your calendar first. Nowadays, it's so easy to see your calendar on your computer or phone, so make consulting it a habit before committing your time.

Leave a buffer - As mentioned previously, it helps to block out some time in your schedule for downtime and self-care. This will really help if unanticipated issues come up such as illnesses, unplanned guests or activities, out-of-stock items, last-minute cancellations, or shipping delays prompting more shopping time.

Expand your schedule - If you just can't say "no," try a compromise instead, so you don't overbook yourself. Instead of meeting up with friends for dinner to celebrate during the Christmas season, you suggest a virtual brunch or an in-person date after the new year. If an extended family get-together conflicts with other commitments, a family reunion in mid or late January may fit in everyone's calendar better.

Take care of yourself - While your natural inclination may be to do for others during the season, we can't say enough about making sure you do for yourself too. Be sure you have time to watch your favorite Christmas classics, relax and listen to your favorite holiday music, attend Church services, and do something that brings you joy at least once a week.

Also, be sure and ask for help when and where you need it.

Final Thoughts

While you might not be able to use all our holiday time and money-saving tips, work in as many as you can.

To avoid a hefty credit card bill in January, try making handmade gifts, use rewards cards or savings apps when shopping online and at retail stores, and take advantage of any sales and discounts retailers offer.

And make sure you schedule plenty of "you" time in your calendar to stay healthy and avoid a frantic season during this most wonderful time of year.