Budgeting for the holidays

NEW YORK (CNNMoney.com) -- Here's how to avoid the chill of overspending and facing unexpectedly high credit-card payments in the New Year.

It's never too late to create a budget for the holidays. Remember to include more than just the presents you plan to buy. Money spent on wrapping paper, holiday cards, decorating, entertainment and travel adds to your overall expenses during the holidays.

Also don't forget to include your upcoming expenses not related to the holiday. Will you be facing a tuition bill in January? Will you have more money deducted from your paycheck to pay for health insurance after the New Year as well?

One way to start planning is to look at what you spent last year and ask yourself were you still paying it off three months later. Then perhaps you spent too much. So if last year you spent $2,000, you may want to consider spending $1,000 or even $500, especially if your income is now lower.

Another approach is to make a list of all the gifts you plan to buy and add up those costs. Remember to include the other holiday expenses, such as travel, and see if it comes to more than you spent last year.

Make a list of each person you plan to give a gift to and set a dollar limit.

"There's no law against you spending different amounts on different family members. And if you go over your $50 budget for Mom and Dad, you can always spend less on someone else on your list," said Sally K. Palaian, Ph.D, author of "Spent Break the Buying Obsession." Just be sure to record all purchases made.

This year many are eliminating people from their gift lists.

A survey by Perfomics, a research arm of Publicis Groupe, finds that nearly three-quarters of those spending less on holiday shopping this year plan on purchasing fewer items overall; two-thirds of holiday shoppers will not be buying gifts this year for someone they have bought gifts for in past years; and friends, co-workers and extended family top categories of those who won't be.

"Consumers have been more cautious throughout the recession, so it's not surprising that those behaviors will extend into the upcoming winter holiday season," said Michael Kahn, SVP of Marketing at Performics. "It is interesting to note that instead of spending a little less per item while buying for the same group of people as in years past, many consumers plan to eliminate gifts for some people altogether."

And include a gift for yourself in your budget. We all know how hard it is to go shopping and not see that one thing that you really want/need.

Also include any gifts or money you will give to charities this season.

Avoid problem stores, places where you have overspent in the past. So if electronics is your weakness, don't go alone into the Apple store.

You may want to consider communicating with family and friends what you plan to spend on them beforehand. This way you are not buying a $50 gift for the cousin who is planning on spending $10.

Keep track of expenses. Put receipts in an envelope. You can even create an envelope for each person on your list. You will then know what you've spent on each person. Keep a list of gifts you have already bought and carry it with you to avoid duplicate purchases.

That certain person you are buying for can trigger emotional overspending. Note it and move on to your budget.

Even external stimulus such as hearing holiday music, smelling the holiday scents of pine and cinnamon, seeing homes decorated for the holidays and piles of wrapped presents can trigger overspending too.

Plan an experiential gift and make memories and connections with others. Arrange for a time to share family recipes with your mom. Go on a hike with your sister and brother-in-law. Have the extended family volunteer at a soup kitchen. Put on a puppet show with the kids. Actually go caroling.

Remember what your intention is for the holidays. It's probably not to spend $2,000.

Talkback: Have you created a budget for the holidays? If so, how do you stick to it?