A 3 step guide to building an Entrepreneur’s personal holiday budget.
Holiday Budget: Hot Topic
The Holidays are here, and we do not have much time to discuss budgeting theory. This article is a hot topic, how-to quick read on creating a personal holiday budget. We have two primary goals today; determining how much we can spend on Christmas gifts, and making sure that we account for our personal tax payment coming due at the end of the year.
Why? Why does this Matter?
The personal Holiday Budget is no different from any other budget except that it takes into account the, hopeful, added income from our business holiday sales, and the added expenses that come with the Holiday events. We need to start thinking about the families we are going to buy gifts for, the Holiday get-togethers that we will be in charge of, and the Christmas Angels we love to support. Scroll down to the bottom of this post to grab some downloads that will help you write out your decisions.
How to Create a Personal Holiday Budget
1. Start the budget with the monthly income:
We have already created our monthly business budget. Start your personal income section with the monthly business income you’ve allowed for yourself this Holiday. Then we will simply add other income sources that might or might not be consistent, such as W2 income, other side hustles, and the like. Let’s do this for both months, November and December. Need some insight on getting upcoming income numbers from your business? Check out our previous posts: How to Create The Holiday Business Budget.
2. Include the monthly expenses:
Start the expense section with the most important categories; the 4 walls. You need to budget for the house, the food, the water and utilities, and shoes for the kids. Once these are covered then we consider other secondary necessities like the phone bills, gas, automotive expenses, insurance, and the like. Finally, we consider our Christmas gifts, holiday events, and party food. I have some great cheat sheets down below that will help you get through your total gift needs. Finally, we MUST keep a line item for our tax bill coming due at the end of the year. If you need a tax projection for this number, I highly recommend that you contact your tax preparer and schedule your tax projection appointment.
3. Calculate the difference to a Zero-Sum:
The last thing we need to do is subtract the expenses from the income. This will give us one of three outcomes:
- A positive number means we have leftover income. This is great, but every dollar must have a budgeted plan. If you have leftover money then you can add it to existing categories that were intentionally low. Also, this might be the right time to put money towards paying down debt, saving for an emergency fund, or investing in retirement or the business.
- A zero-sum is the outcome that we are looking for. Every dollar now has a purpose and we are set to live out the budget that we have written.
- A negative number means that we have overspent our income for the month. This is the reason why we create a budget before the month begins. Now we get back to work on the expenses. The first place we start slashing is the holiday expenditure categories. Work your way back up your budget until you have a zero-sum between income and expenses.
Download the Christmas Family Gifts Budget here.
The Big Picture:
I cannot express this enough: stick with the gift budget that you created and do not overspend. Grab your Christmas Gift Budget download above. Second, watch the projected income from your business and make sure that you will live up to your take-home pay requirements. This could make or break your budget. Do not forget, you must save for your tax payment that will occur after the first of the year.
A Holiday Budget Doesn’t Have to be Hard
Budgets are not hard. What is hard is sticking with them. I highly encourage that you visit a trusted source in managing personal finances: Financial Peace University. Soon we are going to launch a series on budgeting, and we are gearing up for a book launch in January, “How to Budget.” Sign up for an alert below, and we cannot wait to see you back here again.