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. By properly planning, 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 young 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? 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”. Apps like Gift List App and Christmas List App not only keep you on budget, but they can curate gift lists by recipient, track purchases across retailers and streamline your entire holiday shopping experience. Santa’s Bag is another helpful app that also allows you to categorize gifts as ordered, wrapped, and unwrapped. All three of these apps allow you to set an overall budget as well as a budget per recipient and track your purchases to avoid overspending. The days of pulling out the hidden stash of gifts to see how the piles even out are a thing-of-the-past. If you are not an app person or trying to reduce your weekly screen time (the struggle is real), an excel spreadsheet or pen and paper will work as well.
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. Once the card is used up or the envelope is empty, you’re done shopping. If you happen to 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. There is nothing wrong with setting gift boundaries with your loved ones in advance. If you have a large extended family, you might suggest drawing names or doing a white elephant at your holiday gathering instead of buying something for everyone. Even if budgets are not tight, it will most likely come as a relief to everyone to have a smaller list.
5. Don’t be afraid to think outside the box
Have you ever tried to buy for the niece who has every toy imaginable or the mother-in-law who is extremely particular? After so many restrictions due to COVID, experiences are a great way to go. Gifting an experience does not necessarily mean expensive airfare or hard-to-score concert tickets—but could be dinner and a movie or a picnic lunch at a scenic metro park. You can package it in a creative way with printed pictures in the form of clues rather than purchasing gift cards. 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.
