Budgeting over the Holidays: A Step by Step Guide
The Holidays are just around the corner, and while the joy and whimsical atmosphere can make us feel a greater sense of generosity, the cost of said generosity can be cause for stress and financial hard times. To beat the holiday stress, or seasonal depletion of savings, it is important to take a good look at your finances and set a practical budget to make sure you come into January with your bank account far from the red. Here is your guide to setting a budget and sticking to it this holiday season:
See where you stand financially.
Looking at your finances is not always an easy thing to do, but it is important to do so to set an accurate budget. If you are already thousands of dollars in credit card debt, you should probably be looking at the cheapest possible ways to go about gift-giving this year. Make sure to calculate your debt as well as your monthly expenses. It is impossible to set a budget unless you understand fully where your money needs to go, easily making this your first step.
Calculate holiday expenses.
Once you have taken a good look at your financial standing and obligations, make a list of all of your holiday associated expenses. Take into account gifts, writing down everyone you plan to buy for, food if you have big dinners or potlucks, travel expenses, and anything else you plan to spend money on over the holidays.
Disperse your budget
Decide how much money to allocate for each holiday expense; you may want to spend more money on a gift for your mother than you would on your neighbour or mailman. If you can DIY your gifts, you might want to allocate more of the money for food and travel expenses. Deciding on a number for each expense is essential to ensuring you stick within your set budget.
Make room for an emergency fund
I am sure everyone at some time has purchased a gift for someone they completely overlooked in the planning process; a co-worker got you a nice picture frame for your desk so you feel the need to run out and reciprocate. Keeping an envelope of money for any purchases you may have forgotten about or could not predict when making your budget ensures you don’t spend outside of your means.
Don’t borrow from envelopes.
You calculated and thought carefully about each expense and the money you could allocate accordingly. If it happens that one envelope has money left over, put it into your savings rather than spend it on something else; coming out of the holidays with money left over is a present to yourself.
Track your spending.
Make sure you keep track of every single expense; from ribbons and bows, to turkeys and ipads, knowing where your money has gone and what shopping you have completed is essential to the organization of a budget. This lets you know how your budget is doing at all times, keeps you from overspending, and also from forgetting anything you had originally planned on purchasing.
Tips for better holiday budgeting.
- Pay in cash: If we mark our budget into envelopes and use cash only, leaving credit cards at home, we are sure to stay within the set limits of our budget.
- Online shop: The beauty of online shopping is comparing prices and utilizing online coupons. Additionally, this decreases temptation and eliminates impulse buys at stores with excellent product placement strategies.
- Buy early: Sales begin after the Holidays are over, and many items are marked down by up to 75%. By incorporating into your budget after christmas or boxing day sales, you could save on people you will be seeing after the holidays are over, or on next years list!
- Track your spending: There are many downloadable apps to use to track your spending. With diligent use, you are sure to see where your money is going and make more conscious decisions when it comes to spending.
While it can be easy to get carried away in the spirit of the season, it is important not to overspend or get behind on regular monthly expenses purely in the name of the holiday. Setting a budget and sticking to it is the best way to have a happy holiday season from beginning to end.