7 Ways to Budget For the Holidays
It’s almost the season to be merry. As the holidays approach, people spend without reproach. The merriment in the air spreads right through your wallet, tempting you to buy, share and give gifts to make others happy. This is after all, the season of giving. In which case, it almost always implies that you need to spend, perhaps, more than the usual months of the year.
It’s great to play Santa and all, giving thoughtful gifts and hosting fun parties. But come to think of it: how many times in the past years did you go overboard and spent more for holidays than you intended? And also, how long did it take you to recover from the holiday debt?
Americans and Their Holiday Debt
Here’s a least talked about topic: Americans do go into debt more during the holidays. According to MagnifyMoney’s report, Americans incurred an average credit card debt of $1,054 during the holidays in 2017, which is 5% more the previous year. Additionally, half of the respondents say that they will settle their holiday debt in three months, while others say they need more time.
Remorse comes in later, not sooner, and often after you feel the impact of overspending during the holidays. Yes, you had the intention to just share and spread happiness during this time, but you also don’t have to suffer with debt. As debt piles up, so does your stress. And if you’re going to just pay the minimum due amount of your debts, the stress can be a long-term one.
You can make it different this year. You can keep spending in control and still achieve your goals by following a holiday budget.
Ways to Stay on the Budget These Holidays
Plan your gifts
Gifts are the material representation of another person’s value to our lives. Through gifts, you get to show the recipient that you appreciate him/or and you’d like his/her holidays a little more special. And we also tend to think that a more lavish and expensive a gift is, the more special that person is to us.
Such attitude and mentality will only get you into a debt trap. Gifts only need to be meaningful but they don’t always have to be expensive. And even if you intend to give luxurious gifts, you’d still want to plan out your gift-giving so you don’t break the bank.
Take the time to list down this year’s recipients of your gifts and contemplate on what would be the best gifts to give them. If you can shop early when these gifts go on sale, do it. If not, consider all the low-cost yet quality ways to give gifts.
Just so you know, gifts are not entirely material, although they’re most often are. And if you want to stay in the budget, find cheaper alternatives. For instance, you can give personally baked goods and crafts. You can also offer your time and creativity in helping the other person decorate. You may even volunteer your time for anything they need help with.
Set a price limit
A toy can be $15 or $150 and if you don’t set a price limit for gifts and other expenses, you’ll be in the vulnerable position to go overboard.
This year, set a limit for every known expense. For instance, set a price limit for every gift you intend to give, for decors, food and vacation. Look back at how much you spent last year and determine where you might make some adjustments this time around.
With that said, make sure to just spend within your stipulated Holiday budget. And if you do need to spend a little bit more, it should be from the extra money that you can free up from your budget. Be a little rigid and flexible and your holiday spending should well under control.
Create a budget
According to a survey, 77% of the people who set a holiday budget often go overboard by $100. But even if that’s your case, you’re better off than people who do not have a budget. You can make small adjustments later on, such as bringing your own lunch or foregoing entertainment for a month to fill that $100 excess.
It’s also important to create a budget for an occasion lade with expenses. In between gifts, decors and holiday meals, your finances could go out of whack quite easily. With that said, create a budget for every gift, party and all the other expenses related to the holidays. Estimate how much you’ll probably spend for each category, but do give it some breathing room. It’s better to be pleasantly surprised with how much money you still have in hand, than get shocked with how much debt you need to pay in the next several months.
With that said, you’d also want to track your spending. Bring a list with you every time you and subtract each expense from the running total. That way, you’ll always know where you stand and modify your future expenses, if necessary.
Set up a savings account
You may be able to just stash and save your holiday savings anywhere, but you probably want to create a separate savings account for this. You can then earmark this funds as for “holiday spending only.”
Short-term goals like holiday spending are best kept in a separate account. Why? It’s easy to forget and spend it on something else. You might end up using the gift budget for a new leather bag or an expensive dress. The bag and the dress aren’t even gifts to begin with. You might just mess up your entire budget, ending you short of money come Christmas time.
Also consider transferring money from your main checking or savings account towards your holiday savings account. If available, automate the transfer so you know you’re constantly saving, month after month. You can also keep the account open and keep putting money on it as preparation for the holidays next year.
Set money aside each month
If you’re the type of person who starts saving one or two months before the holidays, you probably already know how painful it can be to slash off a good portion of your paycheck for holiday spending. But you can make the pain more bearable if you try to save money for the holidays from January through December.
With that said, go back to how much you’ve spent last year and how much you project to spend this year. You should have a solid idea of how much you need to save for in total.
Next, divide that amount into twelve or the number of the remaining months before the holidays. That amount should be your target savings each month. Think of it: if you can save $50 each month for 12 months, you would have $600 by December. If your goal is $100, you would have $1,200. Either way, you are saving money but don’t even feel it. It would only manifest when you have all the cash you need when it’s time to shop.
Got a tax refund or an unexpectedly huge bonus or commission? You can throw a good portion of that money towards your holiday budget which would both speed up the saving process and beef up the fund in no time.
Cut back on expenses
Another fine way to stay on budget and not go into debt for the holidays is to cut back on some of your expenses. If you need more money for the holidays and think that your paycheck won’t give enough, how about slashing some of your expenses to free up more money?
Consider carpooling to save some money on gas or making lunches and dinners out less frequent. You can also brown bag your lunch made of last night’s dinner leftover and brew your own coffee at home. As you do all these, get the amount that you would have spent and then put it away for your holiday budget. You just need to make small regular sacrifices and you should find the extra money right inside your own wallet.
Buy gifts on sale
You know the drill: every store is seemingly on sale come the holidays. But do you really need until then to pick your gifts? The truth is, stores do go on sale at various points of the year, and you should already be getting gifts on sale even if the holidays is still six months away. Think about all the money you can save!
Having said that, you want to draft your gift list and holiday budget a little earlier. If one of the recipients like Asian antiques, take a good look around during your Asian vacation to see if you can snag a good deal. It’s just July, but you can always keep the gift a couple more months. If another recipient has the thing for floral dresses and swimwear, you can already pick items during the clearance sale. That gift would already be useful in the next few months following the holidays.
Keep a physical, if not a mental note, of what your recipients would like to receive. You might encounter a great opportunity to buy the gift at a much lower price, so go grab it before the sale season expires.
RECAP
The holiday season is always coupled with stress, physically and often financially. Don’t repeat the past mistakes of overcharging your credit card which you need to suffer from until the next season. Keep spending in check with a holiday budget, and you and your wallet, would be just as merry and joyful.
SOURCES
https://blog.mint.com/budgeting/how-to-plan-your-budget-for-the-holidays/
https://www.thebalance.com/how-to-stick-to-your-holiday-budget-2385688
https://twocents.lifehacker.com/start-budgeting-for-the-holidays-now-1828331722
Cary Silverman is a consummate entrepreneur having sold multiple companies during his 20 years of business experience in the financial industry, but for him, it isn’t about the money. His success is rooted in his passion to focus on doing something better today than it was done yesterday. These days, he’s the CEO of Waldo General, Inc. that oversees the operation of King of Kash.