For many people, the holiday season is something you plan months ahead to afford. If you want to spend big on food, parties, and gifts for your loved ones, then you’ll need more than just your month-to-month budget. With today’s prices, this requires careful planning.
How can you prepare your finances for holiday shopping and maintain a practical budget during the holiday season? The right budget can help you make the holidays special through gifting and event planning. Achieve your goals with some useful budgeting tips to help you with holiday financial planning both before and during the festive season.
Understand Your Spending Habits:
The First Step to Budgeting
The first step is to understand where your spending goes each month so you can make clear financial decisions on how to save and budget for the holidays.
The average American spends around $1000 on Christmas alone each year (not including Thanksgiving and New Year’s) and 71% is usually gift purchases, where at least $200 is spent on non-gift items.
Watch Your Bank Transactions
Take a look at your bank transactions. Every checking, savings, and credit card account will have a list of income and withdraws, with some details letting you know why. You can track your wages arriving, your monthly subscriptions and bills, and your individual purchases. Watch this regularly to track your own spending more closely.
Keep and Organize Receipts
You can also track your spending per-vendor by keeping track of digital and physical receipts. Organize your confirmation emails and shopping receipts to see how much you spend every week, month, and season.
Use Apps Like Mint
Budget-tracking apps like Mint can help you get the big picture by tracking multiple bank and card account transactions. You can also build budgets and track how much you spend on each category, like bills, groceries, and fun, and see whether you spend more or less than you expect to.
Determine Your Spending Patterns
All these tools can help you see your spending patterns and then make conscious choices to spend less or how to prioritize your spending. When looking to save money and plan financially for the holidays, this view can help you spend a little less every month and set aside funds for later.
Plan Ahead When
Budgeting for the Holidays
The next step is financial planning ahead for the holidays. You can determine your expected costs, save up for expected spending, and build a budget that will help you avoid unintentional holiday debt when all the fun is done.
List Your Holiday Spending Plans
First, make a list of all the holiday spending you plan or expect to do. This should include ingredients for holiday meals, restaurant tabs, wrapping paper and ribbons, greeting cards, parties and bar cover (if applicable), holiday travel and road snacks, and – of course – gift shopping. Consider both obvious and potentially hidden costs and put it all in a spreadsheet for tracking.
Make a Gifting Budget Chart
Decide how much you will spend on each person or branch of the family when it comes to gifting. 38% of people impulse-shop for gifts. Budgeting is the best way to both plan your gifts thoughtfully, avoid overspending, and spend fairly on everyone. When you buy a gift, check off the amount you spent on the list so you don’t accidentally double-gift or go over-budget.
Create a Savings Account
Choose one account to use as your savings account and start setting money aside months before the holidays so that you know exactly how much is available to spend – separate from your month-to-month expenses on bills and groceries.
Set Aside a Little Every Month
Pick an amount to save intentionally every month and put it into your savings account as soon as you get paid. This will keep you from accidentally spending your holiday money without realizing.
Buy Gifts & Stocking Stuffers All Year, On Sale
Start shopping early. Look for the perfect gifts and fun stocking-stuffers all year and buy when the right gift for each person is at a good price – not when the prices are marked up (or artificially marked down) during the holiday shopping frenzy.
Stock Up on Non-Perishable/Frozen Ingredients
As for food costs, you can start stocking up on non-perishables and frozen items (cans, sauce mixes, bags of frozen chicken, pies, etc) really early, whenever these items are on sale at the grocery store.
Make DIY Gifts
You don’t have to overspend on commercial gifts. If you’re crafty, you can DIY gifts with a delightful personal touch for your close friends and family. Paint mugs, crochet hats, twist wire jewelry, or whatever you do best.
Save What You Don't Spend
If you manage to spend less than you budget for each month, put aside what you save. Spent a few dollars less at the grocery store? Skipped a restaurant meal to eat at home? Put that savings directly in your holiday account as a reward.
You Have Options
Saving Money During the Holidays
Lastly, how can you stick to your holiday budget during the holiday season? We know, this is a season of carefree spending on gifts, food, and experiences. But you don’t have to break the bank to have a good time with the people you love. Especially if you plan ahead.
Catch Holiday Deals Early
First, watch out for the holiday discounts from your favorite stores (where you know a shopping spree is in your future) and catch the deals as soon as they start – or whenever you know the prices will be best. Get your shopping spree out of the way so you’re not tempted toward impulse-buys later. Plus, you’ll have that festive jingly santa-hat to make your spirits bright all season.
Set a Budget and Avoid Overspending
Set a budget. You can spend freely on hot cocoa and new accessories all season as long as you don’t let yourself over-spend.
Set Spending Alerts
Use your bank and budgeting apps to send yourself spending alerts when you are approaching low balance or specific monthly spending limits. This can help you make smart financial decisions all season without accidentally going overboard.
Use a Limited Card for Frivolous Spending
You can also use a limited card, and an especially protected card, so that you and others don’t run your balance into the negative without realizing.
Pack Wisely for Travel
If you travel for the holidays, pack everything you’ll need to avoid the expenses of last-minute shopping for essentials – from shampoo to cold weather clothes in a different climate.
Be a Great Guest
Lastly, be a delightful guest. You can save a lot by attending other people’s holiday parties and dinners instead of hosting them all, yourself. Help out in the kitchen and assist your hosts wherever possible. Be good company, bring a pie, take your turn watching the family children, or cooking breakfast for the crew. If you are hosting, organize your guests to pitch in for potluck and decorations to spread out the costs and ease the burden on everyone this year.
Smart Financial Planning for the Holidays This Year
Now that you’re equipped with these practical budgeting tips, enjoy taking control of your holiday spending. Plan, prioritize, and keep your finances on track during the festivities. Remember, the best holiday memories are about the experiences and the people, not the price tags. Start planning your budget-friendly holiday season now!
If your finances are being held back by debt or you are worried about holiday-related debt this year, DebtBlue can help. Contact us for professional debt resolution services tailored to your personal and financial needs.