4 Tips on Holiday Budgeting for a Less Stressful New Year

 In Financial Planning

 

Do you know what you can reasonably spend this holiday season? Overspending now may lead to a post-holiday hangover in the New Year. Whether you put all your seasonal shopping on credit cards or save up months in advance, you should have an overall budget number in mind.  The bonus to planning is you can lower financial anxiety and increase personal enjoyment in this hectic season.

Here’s how I tackle the holiday budget challenge:

  1. Make a list and check it twice- When making your budget be sure to include all expenses that would be considered seasonal not just a family gift list. Hosting family and friends in your home can come with a hefty price tag in additional groceries alone, not to mention the cost of alcohol or festive décor. Do you have several parties on your December calendar? Unless you plan to brush off a dusty bottle of wine someone brought to the last book club you hosted, don’t forget to add hostess gifts to your shopping list. If you have school-aged children add in babysitting costs, teacher gifts and class party donations. Do you participate in a gift exchange at work or have additional holiday happy hours scheduled? Maybe you participate in an adopt-a-family gift list through your church or make additional charitable donations this time of year? Every year I think this is the year I will get all the shopping done early but things get hectic and some last-minute purchases are inevitable. The key to not overspending is to include all potential expenses in your overall holiday budget so you won’t be in for a surprise when the credit card bill arrives.
  2. Keep track of purchases- Have you ever ordered the same thing twice? You’re not alone. Not only have I gone to wrap gifts and discovered duplicate items, but the increased shipping times make me second guess whether I’ve ordered items or left something in my online “cart”. The Rakuten’s Slice app is great if you do a lot of online shopping. Not only will it help you organize your online receipts and track packages from various carriers in one place, but it will also notify you if the price of an item drops after you purchase it. The days of circling the weekly flyers and waiting in lines for doorbuster deals might be a thing-of-the-past thanks to this technology. If you still prefer a pen and paper over fancy phone apps, just be sure to cross off items as you purchase to avoid doubling up. An envelope with receipts or even a crumpled paper checklist on the bottom of your purse will offer you some sense of order when you feel the stress of those last few shopping trips.
  3. Limit temptation- I admit I fall into the ‘one for you, one for me’ habit when shopping for others. The temptation to buy yourself a cozy sweater or fancy candle can be high but remember people might gift these items to you in a few short weeks. If you need help sticking to your list, you might consider pre-paid visa gift cards or an envelope with a set amount of cash rather than using your credit/debit card this year. Not only can this help you stick to an overall budget but when shopping for multiple children having a prepaid card or set amount of cash for each child can help to keep your spending even. I usually spend a day the week before holiday break emptying out my gift closet and trying to figure out if the piles are even. Once the card is used up or the envelope is empty, you’re done shopping and if you have a balance left over you can treat yourself guilt-free and take advantage of January sales.
  4. Set expectations with those on your list– My sister has already texted setting a new rule that we will only be exchanging gifts for the kids this year. If your budget is tight there is nothing wrong with setting gift boundaries with your loved ones in advance—this also reduces the exhaustion of gift creep. Another way to keep gift costs down and appreciation up is to gift experiences. It’s hard to know which Lego sets your nephew already owns. Maybe you don’t feel spending $50 on an insulated water bottle on your tween nieces’ wish list is a good use of your hard-earned cash. When this happens, I often end up giving gift cards in amounts greater than I would spend on actual items. If you plan to get together with your niece or nephew throughout the year, anyway, why not give them the gift of dinner and a movie of their choice for a future date.  Do they have a favorite sports team or musical artist? Maybe you offer to take them to opening day for baseball in the Spring or a concert.  Not only will this help alleviate your current budget shortfall but might end up being a more memorable gift in the long run. And sometimes spending time together is the most valuable gift of all!

 

Enjoy the upcoming holiday season without the stress of unplanned expenses and start the new year off right with less debt and fewer spending regrets.

 

Our team at Pearl Planning is available to help if tackling a budget has you on the ropes. Reach out to us at 734.274.6744 or melissa.fradenburg@pearlplan.com.

Any Opinions are those of Melissa Fradenburg and not necessarily those of Raymond James.