- Francesca Sacco
How to make a budget for holiday spending
The holidays are right around the corner, and while its’s a joyous time filled with family and friends, the holidays can also be expensive. Gifts, traveling and entertaining can certainly take a toll on your wallet.
The National Retail Federation found that in 2020, consumers spent an average of $1,000 on gifts and other holiday items. That’s up roughly $60 from 2019, and more than $200 from 2018.
Instead of starting the new year with debt, try making and sticking to a holiday budget. There’s still time to save money in preparation, and careful planning should help you enjoy your holidays without breaking the bank. Here are some tips to help get you started.
Understanding your personal finances
The first step in creating a workable budget is to understand where you are in your personal finances. Start by looking at your own debt, especially credit cards. Examine your monthly income and outgoing expenses. Figure out what disposable income can be directed towards holiday expenses. It may be useful to start setting aside money earlier in the year towards holiday expenses. But starting now, and figuring what you can cut out for a few months to set aside more, will provide you with something when the season of giving comes around.
You can build more flexibility into your budget by reducing the amount of expensive gifts you buy. You can still treat your loved ones to heartfelt gifts without going over budget. Remember, it’s the thought that counts.
Creating a budget
The process of making a holiday budget is the same as creating a household budget. Start by figuring out how much you plan to spend. It helps to have a household budget in place, but if you don’t, there are plenty of online services that can help. Once your budget is laid out, you’ll know exactly how much you can afford to spend. Don’t be afraid to make tweaks as you go or find creative alternatives for staying in budget.
Organize your lists
Once you know how much you plan to spend, take the time to allocate where the money will go by organizing your gift list and any holiday list you may have (i.e. holiday meal shopping or travel needs). Start by writing down the people you need to buy presents for and how much you would like to spend on them. This will help you stay organized and on budget. Take the time in advance to brainstorm a couple of gift ideas in case you’re unable to find what you’re looking for. It will save you time and help to prevent you from going over budget if you can’t find your initial gift idea.
Don’t wait until the last minute to shop. The earlier you start to look (and buy), the more likely you are to find the best deals. If you can, take the time to do some research before you buy. You may be able to take advantage of the best price by checking different stores, shopping online or using a price comparison tool.
Don’t forget to take advantage of Black Friday or Cyber Monday!
Stick to your budget!
It’s easy to overspend around the holidays, but learning how to make a budget and sticking to it can make a big difference. For some, withdrawing their budget and shopping with cash is an easier way to keep track of what they’re spending. If you use this method and buy something online, be sure to withdraw the amount from the cash you set aside.
With some careful planning and organizing, you can stay on budget throughout the holidays and enjoy the festivities.
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