Can you believe it? In just about three months it will be Christmas. How the heck did that happen? It feels like we just threw out our Christmas tree and ate the last of the Christmas cookies and already the kids are telling me and my wife what they want from Santa Claus. Unbelievable.

The thing that worries me the most, though, is another round of budgeting and planning for the inevitable Christmas shopping extravaganza. The conversation is basically a cliché around our house. It goes something like this:

Three Months Until Christmas

Me: “Ok, family. I’m setting a strict holiday budget this year and we are sticking to it.”

One Month Later

Me: “Okay, family. We’re spending way more than I budgeted. I mean it this time. We cannot exceed our budget.”

One Month Later

Me: “Okay, family. I give up. Spend whatever you want and give me the receipts.”

It can get ugly. But this year I’ve resolved to try and plan for every eventuality and not go deep into debt. Here's my plan.

1. Be Realistic

If you typically spend a certain amount on a particular person, expect that you will spend that much again this year.

2. Be Fair

You have three kids. Budget the same amount for each. Sure, one child wants electronics that are way expensive and another child wants a bike that costs a lot less. Find a way to make it even out.

3. Be Discriminating

Do you need to buy for everyone on your list? Is there anyone who you’ve lost touch with this year or anyone you could take off your list? This isn’t a chance to play Scrooge. It’s an honest reality that sometimes we buy gifts for people out of habit. It’s a good idea to question whether that needs to occur this year, especially if money is tight.

4. Be Open-Minded

Do you need to buy for your sister and her husband and their kids? Would it be more meaningful – and allow you to save a few bucks – if you just bought for your nieces and nephews and your sibling did the same? Again, this isn’t about being cold-hearted at the heartiest time of the year. It’s about realizing that money is sometimes scarce and tough decisions have to be made.

5. Be Ready for Anything

Make sure that you plan for the unexpected. I was surprised last year when we needed to buy gifts for my child’s teacher and teacher’s aide. I hadn’t budgeted any money for those gifts and I had to scramble. It got done, but I promised to not let that happen again. Another gift need that I usually fail to budget for is money to buy gifts for a less fortunate child. Think about your list and try to think more broadly about other gifts or items you might need.

6. Be Prepared for the Small Stuff

There are so many little things that crop up around the holidays. Here’s a short list of a few things that you should build into your holiday budget:

  • Food for parties and get-togethers
  • Christmas cards
  • Christmas pictures of the kids with Santa
  • Gift wrap and other wrapping items
  • Tipping
  • Shipping items to friends and family
  • Stuffing the stockings
  • Secret Santa gifts

How will you plan your holiday budget this year?