The holidays are meant to be the most wonderful time of the year. A time when we can gather with our families and celebrate all the joy and generosity of the season.
However, for anyone struggling with debt, the holidays can also be a challenging time. The desire to save money can be thwarted by a constant barrage of advertising and demands of “Mom, buy me that!”
That’s why it’s important to create a spending plan before the holidays start and to have a budget in place before you spend a dime.
Not sure where to start? Here are five tips that can help you to create the ultimate holiday budget plan.
1. Know Your Limits
Consumers try to be responsible over the holidays, but too often they are tempted by sales and impulse purchases because they didn’t plan ahead. Many will find themselves staring at their credit card bill in horror on December 26th wondering where all their money went?
Instead of waking up with a credit hangover, it’s important that you set a strict spending limit for yourself before the holidays. When an impulse buy tempts you, remember that the money spent will have to be taken away from another purchase that may be more important to celebrating the holidays.
This can help you to keep your spending in check, while still getting everything you need for the holidays.
Experts recommend that your upper limit on holiday spending should be no more than 1.5% of your annual income. So if your annual income is $50,000, you should set a holiday spending limit for yourself of roughly $800. Remember that has to cover the whole season, not just Christmas Gifts.
2. Plan Ahead
Once you’ve set your spending limit, create a budget that works within those limits. Make sure you’re taking everything into account. For example, you may not be hosting Thanksgiving this year, but are you paying a premium to drive or fly home for the holidays? If yes, that should be included in your budget.
Buying a cool toy for you kids (or yourself) is fine. Just make sure you include the price of batteries or shipping when you determine the total cost.
Planning to entertain? Don’t forget to factor in the cost of all the extras like food and beverages. Are you a big fan of decking the halls? Don’t forget to factor the cost of lights, trees and decorating into your budget.
These may seem like small things, but they can add up to a significant portion of your holiday budget. That’s why it’s important to include them as you plan.
3. Save Before You Spend
One great way to expand your holiday spending budget is to start setting aside money specifically for the holidays. If you can find extra work, or set aside money from your paycheck, that’s great. Just remember you should start doing this before the holidays. Trying to make extra money over the holidays can just add to your stress, and cut into your time with the family.
4. Do Your Homework
Want to get the most out of your holiday budget? Research before you spend. See the gift you want? Compare prices before you get to the store. You may find that you can use price matching to your advantage, or the same item may be cheaper to buy online. Don’t get seduced by advertisements. Chances are if one store is offering a “Low-Low” price, someone else will have it priced even lower.
Don’t do your research at the store. You’re only setting yourself up for unnecessary temptation. The store should be the last step on your shopping journey, not the first.
5. Create A Holiday Budget Spreadsheet
If you’re looking to create a holiday budget spreadsheet, you should set it up so that you can see how much you’re spending across the holiday season and compare it to your pre-determined budget. You should also account for all your expenses, not just gifts, but also travel, food and entertainment costs. Need help getting started? That’s why we created the Ultimate Holiday Budget Spreadsheet. This incredible resource allows you to set a holiday budget that fits your income, and plan for all of your holiday expenses before the start of the season.
Want to create a budget for after the holidays? We can help!
Or schedule an appointment by calling DebtHelper.com at 800-920-2262.