How to make a budget for holiday spending

The holidays are the most wonderful time of the year, but your wallet might not agree. Buying gifts, traveling, entertaining and participating in local holiday events can take a toll on your wallet and have you starting the new year saying, “Bah! Humbug!”

Instead of beginning the new year with debt and stress, try making and sticking to a holiday spending budget. With careful planning, you should be able to enjoy the holiday season instead of worrying about all those bills coming in at the beginning of the new year. Here are some budgeting tips to help you stay on track this holiday season while still enjoying the festivities.

Budgeting Tips for Your Holiday Spending

You can still have a joyous holiday season and spread holiday cheer to others without breaking the bank. Here’s how.

Keep your budget clear and realistic.

Don’t overcomplicate things — this also goes for budgeting beyond the holidays. If your budget is too cumbersome, it can be harder to stick with it. Make sure your budget is simple and realistic to increase your chances of success. 

Your holiday spending budget can include:

• Each person you need to purchase gifts for
• How much you want to spend per person
• Travel expenses if you’re traveling
• Grocery expenses if you’re hosting 
• Decorations 
• Gift wrap, bags, ribbons and name tags

Make sure you get as granular as possible with your list by including the gifts you plan to purchase for each person. This can be beneficial when you start monitoring sales.

Before purchasing decorations or gift wrap and supplies, take inventory of what you already have on hand to evaluate if you truly need more. 

Compare your travel options.

Travel costs can get expensive during the holidays. Before booking your airline tickets, do the math to figure out how much flying your family to your destination and renting a car will cost compared to the cost of driving to your destination. 

Remember to take into consideration limited flight availability, shortage of rental vehicles and unpredictable weather. Also, make sure your car is in good enough shape to handle a drive to your destination. 

Evaluate last year’s spending.

It can be beneficial to look at last year’s holiday spending to help you build this year’s holiday budget. For example, did you make too much food last year? Would a potluck type of meal help you save both time and money? 

The largest consideration to make when budgeting for the holidays is if you’re still carrying debt from last year and what happened last year. For example, did your children enjoy all their gifts, or are there some that they still haven’t used or played with? This can help you determine if you should cut back a bit this year.

Avoid impulse purchases.

Stores (whether a physical retail location or an online store) are designed to tempt you into purchasing more than what you need. This is especially true during the holidays, when they may trick you into thinking a sale item is a great value and a necessary expense. 

It can be hard to resist this temptation when you want to create the perfect holiday for your loved ones (or, let’s be honest, treat yourself a little bit), but remember that impulse purchases can quickly add up and result in large bills in January. This is where having a list of the exact gift you want to purchase for your loved ones can come in handy. If you’ve found a different gift that’s too good to pass up, then purchase that one in place of the original gift you had planned on.

Remember, finding a great deal that saves you money can feel good, but the money you’re spending on impulse purchases can really add up. Keep focused on how much you’re spending rather than the deals you’re getting.  

Start shopping early.

Don’t wait until Black Friday or Cyber Monday to start shopping for the holidays! It’s never too early to start your holiday shopping, and doing so may allow you to find the best deals. 

Once you’ve created your shopping list, start scouring stores and the internet to find the cheapest option for your gifts. By starting early, you’ll have more time to search for bargains, which can hopefully result in a better deal than waiting until the last minute.

Track your spending.

An effective way to stick to your budget during the holidays is to track your spending in your mobile banking app or another money management app. This makes it easy to see where your money is going to ensure you’re not exceeding your budget.

These apps are helpful beyond budgeting during the holiday season. You can also monitor for fraud, set up fraud alerts, create a savings plan and more.

Budgeting Doesn’t Need To Be a Hassle

Budgeting doesn’t have to be a hassle or reserved for the holiday season. Learn how to carry this healthy financial habit into the new year, how to stick to your budgeting plan and more in our free resource, “Budgeting for Beginners: A Quick Guide for Budgeting in Your Twenties.”