Santa has a budget.

My kids believed in Santa for a long time. My husband and I encouraged the magic. Now, this article is not about whether or not your kids should believe in someone who doesn't exist. It's about Santa (or Christmas or Hanukkah) and a budget. Because, Santa has a budget.

Kids watch TV and see commercials.

Or go to a friends house and see what their friends have. And they see things that they want too. A new Barbie. A Nintendo Switch. The latest American Girl Doll. A Hover Board. You know – all the things.

And they come running into the kitchen letting you know about the greatest thing that they found and want for Christmas. But, unfortunately they have NO idea how much that greatest thing costs.

The exact same thing happens to me. When we were building our last house I watched the home dec shows. I would see a light or a pillow that I loved and wanted. I would then do a search and find out that those things were way out of my budget. So, I had to find alternatives that I could afford.

This is what we did with our kids and it really worked.

#1: We saved all year for Christmas. I would make a list of who was on my gift list and give each person a dollar amount. I added it up and divided it by 12. That is the monthly amount I set aside beginning in January.

Another way to approach it is to set aside what you can afford each month. And make sure your spending doesn't exceed that amount. It's all about having a debt free January.

#2: When our kids understood money we let them know what Santa's budget was that year. Sometimes the budget was lower due to a job loss or no bonus payments that year. (We didn't tell them that). And for some reason, they never questioned how we knew. Our kids understood budgets because they received an allowance and were taught about budgets starting at about age 5. You can read ‘8 Tips for Teaching Your Kids About Money.'

We also explained that every family has a different budget. Now, I am sure they asked me why this was the case – but truth be told – I have NO idea what I said. But, it must have been a good answer because they accepted it as fact.

#3: We asked for their lists to be completed the week before Thanksgiving. This not only encourages planning ahead, it also gave us the opportunity to go shopping with them (back in the day we actually went to stores – now it's online :). We would go find the Barbie, or the Nintendo and show them how much it cost.

I had my calculator with me and a notebook. They would write down what it was and the cost. And then when they were done shopping I would add it up AND included sales tax. Tax is a fact of life.

And then we would talk about how much things cost. And how Santa sometimes purchased from the store to get what they wanted because he knew he/she wanted the exact doll and not a Santa copy.

#4: Once they had a handle on Santa's Budget their lists had to be complete by Black Friday. They needed to be sure that what was on their list is what they wanted. No going back.

One year my daughter, I think she was 6 or 7, put her ‘new and improved' list under the tree on Christmas eve. OMG!

#5: When they were older and understood about prices, we had them rank their lists in order of priorities. Their #1, #2, etc. choice. We wanted them to understand that just because you want it.

Just because it's on a wish list – that does not mean it is a done deal. Adults create wish lists too…and rank according to priority.

When explaining to our kids that Santa has a budget we had hidden agendas.

We wanted to:

• Stay within our allotted money for gifts.
• Minimize the disappointment on Christmas morning when their most beloved thing was not under the tree.
• Reinforce the idea of budgets.
• Make sure that out kids understood that just because you want it does not mean you can have it.
• Help them to not compare their gifts to the fancier ones that others received.

One thing I regret not doing during Christmas…

If I had to go back and do it again I would also include a budget item for giving. Something that they could pick out and drop off at a Toys for Tots. Or a homeless shelter.

I always shopped and dropped off but I didn't involve the kids – not sure why that is. Scheduling maybe.

So, in closing – yes, Santa has a budget.

And that is the budget of your choosing. I am all about debt-free living. Saving for your today's AND your tomorrows. Making sure that you are living within your means – because money stress is a real thing. Don't let money turn you into someone you don't like or even recognize.

To this day our adult kids will ask us what Santa's budget is. And, as our family grows, the money has to go further – so the amount per person is less now than it was when they were kids. Which is ok because they are working and earning money and can buy what they want and don't need to rely on us. Gotta love that!

A few extra articles/videos for you:

How I paid off $200,000 in debt.

What is the purpose of a budget?

All the financial resources.

All the money blog posts.