Before we know it, the holidays will be upon us. Have you started building your holiday budget plan yet? The earlier you start planning, the easier it is to manage your holiday spending. One of the best ways to do this is to look at last year’s calendar to see what events there were and try to estimate what spending looked like for each event. This can help with tracking holiday spending throughout the season.
For many, the holiday season starts in September as Halloween is becoming a larger event every year. This means that if you include New Years and the college football play-offs, the decorating and gathering for the holiday season can last almost 5 months. It may seem like that is stretching it, but as the line continues to blur as to when you start and end holidays and how different events are celebrated, it can feel as if the holidays are creeping further through the calendar as each one transitions directly into the next. This longer season can make managing holiday expenses even more important.
1. Don’t Forget to Budget for Non-Gift Expenses
Whether it is the hosting you do at your home, the various white elephant gifts for different gatherings, updating or replacing decorations, or new clothes you might want for a holiday event, these expenses are part of the holiday budgeting process. Remember to include any travel or babysitting expenses.
2. Build a Holiday Fund Throughout the Year
The holiday season doesn’t appear out of nowhere. Each and every day the holidays (and holiday spending) come closer. You can literally find countdowns to the holidays that start the day after the calendar date of celebration. If the holiday season is a time of big expenditures for you, you should be saving up for them throughout the year, so you can save for holiday shopping instead of scrambling in November or December.
3. Evaluate and Communicate How you Would Like to Celebrate
No matter how large or small your family, it is good to communicate how you wish to celebrate as a group. You may find out that others would also like to reduce their holiday season spending. Traditions that no longer serve you become obligations rather than celebrations, and it’s important to create a way of celebrating that brings joy rather than creating burdens and stress. This can also help you avoid holiday debt by keeping expectations aligned.
4. Consider your Gift Giving Strategies
We all have people in our lives who are financially struggling and need the holiday gifts to help them with items they are not able to buy throughout the year. We also have people in our lives who don’t want or need more stuff and would prefer to have the experiences of our time. Do your research to determine what types of gifts people would prefer to receive so that your spending doesn’t go to waste. Be open regarding your own wants and needs so that you don’t receive gifts that immediately get placed into the donate pile. Thoughtful planning is a key part of how to budget for the holidays.
5. Make a Holiday Budget Plan
Make sure that your holiday budget includes everything that you will want to spend for the holidays. If this is more than you can afford, look at where you can cut back. Do you really need a new outfit or new decorations? Are there ways to create additional income for your budget? Are there opportunities for overtime at work? Often people need more time at the holidays for travel or preparation and this can create an opportunity for others to pick up more work and income. If you need some inspiration, check out our holiday budget planner example below:
6. Track and Evaluate Your Holiday Spending
The best time to plan for next year is when everything is fresh in your mind. If you can make the time to track your spending this year it will help you evaluate what you would like next year to look like. This will give you more time to communicate with the other people in your circle so that you can all have a more meaningful, joyous, and affordable holiday season.
7. Save Ahead to Avoid Post-Holiday Debt
Tracking holiday spending each year and knowing what you can afford to spend is a big first step to managing the post-holiday financial debt. The ultimate goal is to save ahead of time for your holiday spending so that you know how much money you have available for your holiday season.
If you haven’t already done so, create a separate bank account and regularly deposit money into it to have available for holiday spending. If you don’t have the money for something, try to figure out a different way to achieve your holiday celebration goals. It’s better to save up ahead for the holidays than to be paying off the credit card debt for months (or years) after the celebrations are over.
Prepare for Unexpected Holiday Expenses
Remember that no matter how well you plan and budget there will be expenses that did not make it to the list. Whether it is a last-minute gift for an unexpected guest, price increases, or an additional gathering for out-of-town family, there will be surprise expenditures. Try to leave room in your holiday budgeting to cover holiday spending surprises.
Make the time and effort to know your income and manage your expenses (and not increase your debt) so that you can enjoy the holiday season.
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