Is your holiday budget ready for the coming season? If not, that is okay. You still have a lot of time before the holiday shopping rush is upon you. However, you need to start working on it now. This budget will help define how much you plan to spend during the season of gift-giving. If you do not do this, there is a chance that you might end up overspending.
According to reports, it is during the Winter Holidays when consumers spend the most – followed by back to college and back to school expenses. In 2018, consumers spent an average of $1,007. Considering all the special event expenses (Valentine’s, back to school, mother’s/father’s day, etc) in 2019 went up compared to 2018, it is not unlikely that the Winter holiday expenses will also increase.
If you ended up in debt after the holidays because of overspending, that is a sign that you really need to have a holiday budget. Having a clear budget plan will help control your spending so you will not put yourself in debt this coming year. Usually, people who acquire holiday debt are those who failed to realize how much they need to spend until it is too late. With their cash funds running low, they end up relying on credit cards to make ends meet.
But if these people create a holiday budget early on, they would have a more accurate idea of how much they really need to spend. If their funds are not enough, they can find a way to get the finances to pay for what they need without resorting to debt.
Tips to create a holiday budget
If you haven’t figured it out yet, a budget plan can serve as your spending guide. Based on the spending behavior of consumers in the past holiday seasons, 1 out of 3 purchases is impulsive ones. This is the main cause of overspending – when it is not planned. But when you have a budget plan, this is less likely to happen. A holiday budget tells you how much you are allowed to spend on specific categories. It will keep you from overspending. And in case there is a need to go beyond your budget, you know the limit for the other categories that you will spend on. You can make the necessary adjustments so you will not go beyond the total holiday budget that you have set for yourself.
So how do you create a budget plan that can help you with your holiday spending?
Make a list
Start by making a list of all the expenses that you expect to spend on. You can group them by categories like gifts, food, decorations, etc. If you plan on traveling during the holidays, you should probably set a different category for this. Of all these categories, spend more time on the list of gifts that you plan to give. Group the recipients and rank them according to priority. Most likely, this is where you can limit your budget to make it lower. For instance, you can DIY some of your gifts so it will not eat up too much of your holiday budget.
Set a spending limit
Once you have your list, you can now set a limit for each category. Before you can do that, identify the overall budget that you have. Will you be spending $1,000 for the holidays? If that is your budget, divide it among the different categories in your list. Will you be spending $100 for decorations, $300 for food, and the rest will be for gifts? It all depends on the details on your list. Make sure that you will set aside some extra money for unexpected expenses.
Start saving for each category
Since it is still a few months before the holiday season officially starts, you can start saving for every category. This is why you need to create your holiday budget as early as you can. You will have enough time to save any extra money that you will get. You can sacrifice some of your usual expenses so you can save enough money in anticipation for the holiday shopping that you will do.
Schedule your shopping errands
Starting early also means you can schedule your shopping errands. You do not have to rush into anything. You can take advantage of any sale event that will take place from now until the holiday season starts. It is easier to implement smart shopping habits when you are following a plan. When you do your holiday shopping at the last minute, you will end up just buying whatever you find first. You do not have time to check other stores that may be offering the same product at a discount.
Track your spending
Since you have more time to complete your holiday shopping list, it will be easier for you to track your spending. You can check if you are sticking to your budget. In case you have overspent on something, you can either cut back on what you will spend on other categories or you can opt to earn extra money so you have more funds in your holiday budget.
How to save for holiday spending
Once you have your holiday budget, you need to focus on saving enough money to cover all the expenses that you have listed. Remember that you are doing this so you will not overspend and accumulate a huge holiday debt. When you go through the holidays without any debt, you do not have to feel apprehensive about anything. You get to prolong the joy of the season because you spent your money wisely.
Fortunately for you, there are ways to make saving money easier for the holidays. Here are some tips that you can use to be successful in reaching your saving goals.
Save in a separate account
This will keep you from using your holiday funds for something else. Make sure this is an account that you cannot access immediately. It might be tempting to use it and if you give in to the urge, you will be compromising the funds that are supposed to be for the holidays. You do not have to open another account. If you have multiple accounts, you can use that. Or you can just set aside the money as cash and place it somewhere safe – and not in your wallet.
Find out where you will get the funds
It is also important for you to decide where you will get the funds. Will you slowly save up for it by cutting back on your lunch money? Instead of buying food for lunch, you will just brown bag it? The extra money that you can save can be used to fund your holiday expenses. Or if you are expecting a bonus from the company, maybe that can finance your holiday budget. Just make sure that the funds will really be there when you need it so you will not be tempted to use your credit cards. Otherwise, you might end up like the 28% of shoppers who found themselves paying for their holiday debts even after the season has come and gone.
Earn extra money when you can
If you cannot cut back on your usual expenses, you might want to find a way to earn more. Maybe you can take extra shifts so your monthly salary will be bigger. Or you can get a temporary side. You can also opt to declutter your house and sell the items that you do not need. Any profit that you get from the sale can be added to your holiday budget. This will not just give you extra funds, it can also help you get the space that you need for any gifts that you might receive this coming holidays.