The holiday season is always approaching so quickly.
You are enjoying a beach umbrella drink in Summer and suddenly you find yourself creating a shopping list for the holidays, hoping to avoid overspending this year.
The holidays can be a stressful time for your bank account. Spending time with friends and family, as well as giving to others, is a great way to spend the season.
There are some ways to stick to a budget and maintain your personal finances. Here are some essential tips that will help you avoid going into debt this holiday season or spending too much.
Table of Contents
Statistic on Holiday Spending
How to Create a Holiday Budget
Budgeting for Your Holidays
Save money on Holidays
Final Thoughts
Statistic on Holiday Spending
You can’t believe that stores and websites are already advertising holiday sales before November has even begun. It can even start before Halloween has had a chance for the rush to die down.
Sigh.
Many people, including myself, like to start planning and buying items early before the mad rush of the holiday season begins.
Before we get into budgeting for holidays, I thought I’d share a few interesting stats about holiday spending.
Cloudways says:
Gen X is the winner of the most expensive holiday spenders with an average of $782 dollars in the USA, and PS425 pounds in the U.K.
The average amount spent by millennials during the holidays is $609 in USA and £416 in UK.
Baby Boomers spend less on average during the holidays, with an average of $576 dollars in the USA and £350 in the UK.
The average American spends $1,226 per person on Holiday Gifts
If you go back and look at historical data, these numbers are increasing every year. These are only averages. You may spend more or less.
Fortunly reports that 22% of Americans are worried about debt after Christmas. Yikes!
It is important to create a budget for your holiday spending. This will help you avoid debt, and prevent overspending due to impulsive purchases.
How to Create a Holiday Budget
You should set up a budget as you start saving for the holidays. This will help you to stay on track financially.
Overspending and going into debt is not the best way to spend the holidays or start the new year.
Remember, it is not only the gift-giving that counts. Everything from food to decorations and parties can add up. All of these things can have a negative impact on your finances and debt.
Here are some simple but effective tips for creating a holiday budget.
Decide where you will be spending your money this year.
Keep a list of all the places you will be spending your money. Keep a record of your spending to help you decide where you should allocate savings.
Include all items, even small ones.
What are some examples?
Gifts for family members
Gift wrapping and decorations
Secret Santa or Work Gifts
You can prepare food for a family event or a work gathering
You may also want to break down your holiday budget by the people you are shopping for, and set spending limits. You can be as specific or vague with your budget as you like.
Set a budget for the holiday season
You can set a spending limit once you have determined where your money will be spent and what you expect from the holidays.
It’s impossible to know exactly how much you will spend without itemizing each purchase. However, you can set a limit.
You can then decide where you want to spend certain percentages.
Find a number that you are comfortable with.
You won’t be forced to use credit or get into debt
Will make sure you are able to pay your rent/mortgage and bills while still putting food on the table.
Last but not least, your budget should allow for some flexibility.
Imagine you have a budget of $1000 for your holidays. Increase it by 10-15% in case you forget someone or something on your list. Your total now will be between $1,100 and 1,150.
You want to stay within your initial estimate but you can use the extra 10-15% in case it is needed.
Save for your holidays separately
Open a separate account for holidays if you’re afraid to keep track of your savings in current accounts.
Divide your holiday budget by the number of paychecks left.
You can also set it up to automatically deduct the amount from your pay each payday. It is possible to set up automatic deductions from your paycheck so you never forget.
If your budget is $1100 and you still have 8 paychecks to go, then you would need to save $137.50 for each one.
It is important to start early so that the amount you withdraw is smaller and you will hardly notice it.
Keep track of your purchases and stay on track
Tracking your purchases is necessary to keep your budget on track.
Every time you purchase something, add it to your budget and subtract it from the total.
You can do this manually with your budget spreadsheet or you can use technology to help. This can be done manually using your budget spreadsheet, or with the help of technology.
You can track your purchases using a few apps. You might also want to consider:
Clarity Money
Mint
Mvelopes
Personal Capital is a great tool to keep track of your spending, expenses and investments. It’s free and very easy to use.
Spending extravagantly is not a free option
Spending excessively during the holidays can be stressful. Do not put yourself under more pressure. Do not worry about how much others spend or whether their gift is more costly.
Don’t compare your financial situation to others.
I find that thoughtful and creative gifts are more meaningful than spending a lot of money on materialistic items.
Go for it if you are able to afford more luxury and feel comfortable. Don’t be influenced by the pressure of society to spend more money on your vacation if you don’t have it in your budget.
Budgeting for Your Holidays
It can be easy to go over budget when you’re shopping for someone else.
It’s really a wonderful feeling to give gifts to people. You still have to set a limit.
Many people won’t be happy if you go into debt, or struggle financially because you wanted multiple or expensive presents.
Try these tips to help you stick to your budget:
Set up phone reminders or email alerts and sit down to enter numbers in a spreadsheet, cross off recent purchases, etc. Set up phone or email reminders, and then sit down to enter the numbers into a spreadsheet.
Do not change your budget or spending limit. It is important to do this first. You can adjust your budget if you need to make alterations or if someone/something is missing. Do not increase your limit, or you will continue to make changes.
You should take your time when making purchases. It might seem like an amazing gift at first, but you should think about it. It may be too expensive for your budget, or it may be cheaper somewhere else.
Spend less money on yourself. If you’re worried about your holiday budget this year, it might be time to reduce some of the indulgences. Even though I don’t like the advice to cut back on coffee and eating out, it may be helpful as the holidays near. Before making any purchases, you should ask yourself whether or not you need them and how they will help your holiday budget.
Holiday Budget
Save money on Holidays
Start saving money as soon as possible to ensure that you have enough money for the holidays.
You won’t have to worry about money as the holidays near.
It is difficult to build an emergency fund when you are trying to pay off debt, save for retirement or have bills.
You can begin saving as early as January by taking a small percentage from each paycheck.
I wish everyone could do what’s above, but in reality it isn’t possible. Here are some tips on how to save money for the holidays.
Separate savings accounts
Open one at your bank, or with another account you won’t use for anything other than the holidays. CIT Bank’s Savings Builder is my favorite, but you can open an account at a variety of banks.
Avoid debt by sticking to cash only purchases
You can save a lot of money by sticking to cash. Keep your credit card home to avoid temptation or overspending. Stick to cash instead of debt.
Use coupon codes or sales to save money
The holidays are also the perfect time to learn how to spot sales and coupons. You’ll be able to find them everywhere if you start looking.
Cash back Apps on Purchases
I started this myself, with Ibotta. But there are many cashback apps that can put money in your pocket. It’s not a tip for saving money on holidays, but it does help you to spend less.
Ibotta is a free app that offers cash back. ).
Side hustles or jobs that pay immediately are a great way to earn money.
Take on a part-time job or side hustle to help you save for the holidays. Don’t depend on side hustles or online businesses.
You could be driving for Uber, walking your dog on Rover, babysitting or working part-time in a retail store or grocery store.
Spend less on yourself if money is tight
It may be necessary to cut back on your own indulgences. Use the money you would spend on a daily or weekly coffee to put towards your holidays. You can cut the cable or stop eating out for a while.
If money is tight, you may need to cut back on your spending.
If you still need cash, sell some things.
You might be short of cash even after doing all this. You can sell some of your things for cash if that is the case. You can host a garage or yard sale, sell items on eBay, Craigslist or Facebook Marketplace.
It’s possible to add money to your holiday fund by selling items you no longer need or use.
Final Thoughts
Do not let the holiday spirit and the family cause you to be in financial trouble.
Be sure to set a budget and stick to it.
Nobody expects you to blow your budget for the holidays. If they do, then they don’t deserve any gifts from you. Do not compare your spending to others.
You can still enjoy your gifts without accumulating credit card debt if you only spend what you can afford. Don’t forget to be creative and sentimental when you give gifts. These gifts can often mean much more than random material items.
