Budgeting for a Stress-Free Holiday

Written by Nathan Woolard

The holiday season is a time to rejoice and celebrate with loved ones, but it can also put a huge strain on an unprepared wallet.  We’ve all suffered our share of cringeworthy “overspend” moments and paid the price for them in more ways than one.  After a long year of watching your spending, the temptation to splurge can be overwhelming, especially in the middle of a gift-hunting frenzy.  Despite how it might feel, it is possible to get through your shopping without breaking your bank.  Follow along for some tips on proper budgeting to help you skip out on the headache of a holiday debt hangover:

·         Make a list of holiday expenses.  Start off by making a list of everything you expect to spend money on, and remember that this might be more extensive than you initially think.  The obvious concern is gifts for your family and friends, but you might also want to get some small gifts for other notable people in your life, like coworkers, teachers, or postal workers.  You’ll also need to account for other expenses like cards and stamps, wrapping paper, extra groceries for favorite holiday recipes, traveling costs, and childcare or pet care for adult outings.  It can be easy to overlook these incidentals in the excitement of gift giving, so don’t forget them when planning a budget.  Still, no matter how thoroughly you plan, some expenses will inevitably slip through the cracks.  To best prepare yourself for anything, it’s a good idea to add a miscellaneous category to your list to cover potential surprises.

·         Set a spending limit.  When considering how much you can afford to spend on the above items, be sure to only take into account money that you’ve already designated for this purpose.  You’ll just be setting yourself up for unnecessary trouble if you take money from other essential areas of your budget, so only draw from specified holiday savings or extra money in other areas of your budget.  Additionally, don’t plan to spend more than you have saved by using a credit card with the assumption that you can pay it off later.

·         Divide your budget.  Once you’ve set your spending limit, assign a specific amount to each of the categories on your list of expenses.  Remember that you won’t spend the same amount for each person or outing on your list, so go one step further and dedicate a set amount for each individual person and activity.

·         Make a shopping list.  To help avoid excessive impulse buying, write out a list for your holiday shopping with a couple gift ideas for each individual – within your designated price range, of course. 

·         Avoid paying for gifts on a credit card if possible.  It’s easy to overspend with a card, but you’ll be more likely to notice your reserves dropping if you stick with cash.

·         Watch for sales.  It can also be worth your time to plan ahead for big sales like Black Friday, where you might be able to snag some great deals for less money than you budgeted.  Some of these sales extend to online shopping and some offer free shipping as well, so keep your eyes open for whatever opportunities you can seize.

·         Track your purchases.  The receipts can pile up fast once you start making your holiday purchases, but don’t let that be an excuse to lose track of your spending.  Bring along your gift list and budget sheet whenever you go shopping to help you stay focused, and don’t forget to subtract your money spent from your budget total.  Keeping up-to-date with your spending will make it easier to stick to your limits and to make any necessary adjustments between the categories of your budget.  Keep a record of all your expenditures to assist in more accurately planning your holiday budget for next year.

With a bit of discipline, you’ll be well on your way to managing your money for the holiday season.  If you want some extra help saving up ahead of time, check with one of our personal bankers about opening a Christmas Club Account.  Start saving in January and put aside some of your extra money each month to build up your holiday fund.  When the time finally arrives, you’ll find yourself much better prepared for all the trimmings and trappings of the most wonderful time of the year.