Believe it or not, the holiday season is right around the corner. For many, that means waging a yearly struggle with financial planning for the holidays, which may have you asking: How much can I spend? Will I go into debt? Do I have enough to make everyone happy?
It doesn’t have to be this way.
In fact, evidence suggests that Americans who take the time to make a holiday budget spend less money overall. Your best bet is to start planning for your seasonal expenses now.
Here are nine budget tips you can use to get ahead this holiday season.
Don’t ignore your other bills
The holidays are only temporary and can introduce all sorts of seasonal expenses. But during this time, don’t forget about or ignore your other bills. If you miss paying some of your regular bills, you may fall into a delinquent or late payment cycle that can be extremely hard to end.
Instead, the better thing to do is create a holiday spending budget that takes your other expenses into account.
Do your best to dog-ear the amount that you pay in bills from October through February.
Once you have a good idea of what you expect to have to spend, subtract that from your total income for each month. Then, use whatever is left over to decide on a reasonable amount of money to put toward your holiday expenses.
If you’re having trouble coming up with extra money to set aside, consider creative ways to cut your usual bills to make room for holiday savings.
List every holiday expense and make a shopping list
Aside from the usual gift-giving, there are bound to be other expenses you’ll need to cover over the holidays.
Write out a list of these costs to help you through the budgeting process and predict where your money will be going.
Your list of expenses will be unique to you and the holidays you celebrate, but remember to consider costs such as:
- Halloween costumes and candy
- Thanksgiving and other holiday meals
- Holiday decor and wrapping
- Gifts for everyone on your list (which may also include any bosses, co-workers, teachers and extended family members, too)
- Any travel costs related to the holiday season
Set limits on gift spending
If you can’t afford to spend much on gifts this year, plan with family members to set a spending limit or creative gifting. Chances are they’re already thinking the same thing and will be glad you suggested it.
As far as ways to cap your spending, consider limiting gift-giving to kids only.
Alternatively, think about a secret gift exchange, where each person draws a name of a recipient but doesn’t share who they’re buying for until the gift-giving day. This not only reduces the amount of gifting to one person each, but can also help set a firm budget per gift.
Here are even more ways to avoid spending too much on holiday gift-giving.
Track your spending
Once you understand how to budget, the next step is to track your spending. Recording your costs will make it easier to see where your money is going as it happens. Luckily, there are lots of free tools that you can use for this, including smartphone apps or a simple spreadsheet.
If you’d rather use the spreadsheet, follow these steps to get started:
- Enter your estimated holiday budget. (TIP: Review last year’s bank statement to get a realistic number.)
- Add fixed expenses, like hotel stays or flights, then add varying expenses like gifts.
- Enter purchases as you go.
- Set up alerts or daily balance notifications to help keep you on track.
Stick to your spending limits
When you’re ready to shop, be sure to stick to your budget.
Retailers try to encourage impulse buying by offering sales that look too good to pass up. Daily emails and text offers are other ways they sweeten the pot.
But don’t be so quick to take the bait. Research shows that Americans who chase sales are 45 percent more likely to spend more than they planned.
You can avoid overspending by going into a store or by visiting an online site with a plan firmly in mind. Write out a list of the gifts you have to buy and how much you plan to spend on each one. Then, once you’re shopping, make sticking to the plan your top priority.
Watch out for convenience spending
The holidays can be stressful, which can make it tempting to spend your money on conveniences like hitting the drive-thru or ordering pizza.
Just keep in mind that those small expenses add up and can eat into your carefully planned holiday budget.
When the urge to spend on conveniences hits, ask yourself, “How much time and money am I really saving?”
Start shopping early
If you’re looking for bargains to help stretch your holiday budget a little further, start your shopping well in advance.
Stores mark up their pricing during the holidays to make you feel like you’re getting a great deal on those seasonal sales. In reality, you can find the best deals before the holidays even begin.
Book flights now
It may feel early to start thinking about booking holiday travel, but planning ahead can help you save big. According to one online study, the best time to buy a ticket to travel in the United States is around 80 days in advance of your intended travel day.
Save a little each week
Saving money can be difficult if you’re living paycheck-to-paycheck, but every little bit adds up.
Even if you can only put a few dollars aside each week, the amount you’ve put away will add up over time. You can even set up automatic deposits or savings transfers in small amounts to a savings account dedicated to holiday gifts. If you follow this approach, make it difficult to withdraw from that account.
If you start stockpiling funds for holidays now, by the time they roll around, you’ll have a lump sum that can help you cover some of those extra expenses.
Set yourself up for a happy and budget-friendly holiday season
In the end, avoiding holiday overspending is all about preparation.
Try by saving a little each week, perhaps even earlier in the year. Set spending limits, track your purchases, and do your best to stick to your budget.
You’ll be more likely to get through this holiday season, and holiday seasons to come, without having to worry about starting a new debt cycle.