With the holidays fast approaching, now is a great time to start preparing your budget. When you create a specific budget for the holidays, you can reduce your stress levels and enjoy the season without worrying about money or January’s credit card bills.
If you prepare ahead of time, you can pay for the holidays in cash and stay on track with your financial goals. Let this year be the year you aren’t regretting all those purchases after ringing in the new year!
Here are five things you can do to prepare for the holidays without wrecking your budget.
Creating a Budget for the Holidays
Everything starts with a budget. Decide now what you want to spend and how much you can afford for each of the upcoming holidays. You can create a general holiday budget, or you can do a budget for each holiday.
Holiday budget: $1500
- Halloween: $100
- Thanksgiving: $200
- Christmas: $1100
- New Year’s: $100
It’s important to write your budget down. A budget is a goal for your money, and you are 1.5 times more likely to achieve a goal if you write it down. You can even make a budget for each thing or person.
Your Christmas budget is $1100
- Dinner: $50
- Mom: $50
- Dad: $50
- Child 1: $150
- Child 2: $150
- Grandparents: $100
- Giving: $200
- Boss: $20
- Decorations & wrapping: $50
- Tree: $30
- Travel costs: $200
- Miscellaneous: $50
This is just an example, but you get the idea. A recent survey showed 31% of people go into debt and 1 in 5 people dip into their emergency funds to pay for holiday giving and cheer. Making a budget for the holidays will help you manage your finances and not overspend.
Plan for and Prioritizing Expenses
Part of preparing for the holidays is making a list and figuring out which activities you want to spend money on. A budget is simply prioritizing your money. Make a list of all potential activities and gifts, then list in order of priority.
If you don’t have the money for something, know that going into it. If you have a yearly tradition of traveling to grandma’s house and it’s a high priority item, plan for it in the budget.
Some activities to consider:
- family dinners
- work parties and/or gifts
- giving and donations
- festivals and entertainment
Then decide what is a must do, should do, and would like to do. Decide on a budget for each item and see how far you can make it down the priority list. There may be things you can’t afford to do. However, if you plan for items in your budget, then they won’t mess it up later.
If there is something you’re afraid your family is going to guilt you into doing, just budget for it now. (Or learn to say no.) If you can get out of it later, then put the money toward a different goal. It is better to be prepared than having to scramble to get the money together later, or using a credit card.
A budget is all about prioritizing your money. When preparing for the holidays, mentally and financially, it’s important to decide what is worth your time and what isn’t.
Track Holiday Spending
Once you have your budget and priorities, you need to keep track of what you spend. You can accomplish this in a couple of ways: an app such as Tiller or Personal Capital, an Excel or Google spreadsheet, or cash envelopes.
Keep receipts for all of your purchases too! If you need to return an item, it is easier to get what you paid for it back with a receipt. Otherwise, you may be issued store credit or even get a reduced price amount for your return.
If you usually use credit cards and struggle to stick with a budget or you go into debt over the holidays, cash envelopes are a great way to stay on track and change your behavior. You will likely spend less than swiping a card because when you’re out of money, there’s nothing to spend.
Prepare Your Family
Let your immediate and extended family know ahead of time what your plans are for the holidays. Decide what activities and traditions you want to participate in and be ready just to explain that you can’t do everything this year.
You do not have to continue holiday traditions that leave you broke, tired, and stressed.
If you can’t afford to buy everyone in the extended family gifts, suggest doing gifts for only kids or doing a white elephant gift exchange. Start bringing it up now and see what your family is willing to do. Then prepare your budget for whatever everyone agrees to do.
Giving in Your Holiday Budget
Decide how you want to give back this year and put it in the budget. There are lots of ways to give during the holidays, and they don’t all require money. You can make a significant impact with little or no money. Consider donating your time and energy to help a variety of causes.
If you want to give in more significant ways, decide now how much and put it in your plan. Brainstorm with your family ways to give back and get everyone involved. Here are 6 ways to give back this holiday season for more ideas. Set a budget for giving and see how you can have the most impact with it.
Start Your Budget for the Holidays Now
If you create your budget now, it will be easier to buy things on sale and get a head start on a gift list. Start buying things a little here and there now to help reduce stress for the holidays and protect your budget. The more prepared you are, the less stressed you will be.
This will also limit trips to the store and dealing with shopping chaos. Every time you run to the store, there’s a chance you’ll impulse buy or spend money you don’t have. The more you can control your spending and get things done ahead of time, the better off you and your budget will be!
You’ll Thank Yourself Later
Spend time in the early fall deciding what you want to spend over the holidays and what is a priority for you, your family, and your money. This will benefit you not just financially, but emotionally too.
Deciding what you can and can’t afford now will help you later when it isn’t a struggle every time you think about the holidays over the next few months.
You can find plenty of ways to save money and still have fun!
The holidays are meant to be a joyous time spent with family. Remember the reason for the season and find some ways to have fun without wrecking your budget. You’ll thank yourself during the holidays and in the new year for considering your finances well ahead of time!
Article written by:
Ashley, a Women Who Money guest contributor and the owner of Budgets Made Easy. She was able to pay off $45,000 in 17 months. Now she helps people budget their money so they can pay off their debt. You can follow her on Facebook.