How to budget for the holidays together

December is the most predictable large cost in a household's year. The date does not move, the approximate size is known from last time, and it is nonetheless the cost most likely to be met with a credit card and a resolution to plan better next year.

The reason is not carelessness. It is that holiday spending is not one decision — it is thirty small decisions made under time pressure in a four-week window, and thirty small decisions with no total attached will always come to more than anybody intended.

Set the total before the list

Almost everybody does this in the wrong order: list the people, decide what each of them should get, price it, and discover the total. Done that way the total is an output, arrived at after every individual decision already feels committed.

Reversed, it is a completely different exercise. Start from what the household can spare. Divide it between the people you are buying for. Now each individual decision has a number attached before you go looking, which is the only point at which a budget can actually do anything.

The costs that are not gifts

Gift spending is the part people budget for and roughly half of the real total. The rest is the part that gets described afterwards as things adding up.

• Travel. Flights or fuel to see family, at the most expensive time of year to do either, and frequently booked late.
• Food and hosting. A meal for eight, drinks for visitors, and the general increase in a household's grocery spending across three weeks.
• Decorations, cards, postage and wrapping. Small individually and reliably surprising in total.
• The social season. Dinners, drinks, a work thing, an outfit for it.
• Tips, teachers' gifts, the neighbour, the person who does your hair. Easy to forget and awkward to skip.

💰Whatever your gift figure is, the other categories together are often comparable to it. A household that budgets $600 for gifts and nothing else has budgeted for about half of December.

The two-families problem

For couples, the most common holiday money disagreement is not about how much to spend. It is that two people arrived from families with different customs, and neither of them experiences their own as a custom — it is simply what Christmas is.

One family does substantial gifts for everybody including adults. The other does token gifts for the children and nothing else. Both people think the other is being unreasonable and neither is: they are describing two different normal.

The workable answer is usually to stop trying to reconcile them. Agree what each side of the family gets, separately, out loud, and accept that the two numbers may differ. What produces resentment is the silent version, where one person quietly scales their side up to match and nobody has said anything about it.

Eighty dollars a month

A $960 December is $80 a month from January. That is an ordinary line in a household's fixed costs, smaller than most phone bills, and it is the same money in both cases — the only difference is whether it leaves gradually according to a plan or all at once on a card in December.

Starting in January is the version that works. Starting in September, which is when most people think about it, means $320 a month, which is the point at which the plan is abandoned and the card comes out anyway.