It’s coming! The time we light up the tree, light the candles, and celebrate the holidays with love ones. However, the time for gift exchanges are coming as well! Did you know we can spend an average of $800 for holiday items (however, it includes décor and cards) in 2018 season? Holiday budgeting takes time, effort, and discipline. Here are some tips on how you can keep on track with your budget!
- Decide how much you can spend – Holiday money MUST come from your disposable income. If you plan on using credit cards, prepare for a bill that could take months, or even years, to repay. Not only would it take months for you to pay it off, but think about the interest rate. That is extra money you shouldn’t have to spend! Ideally, you might have saved extra money throughout the year to prepare for this time of year. If you haven’t (which most of us here admit we didn’t), cut back on some extras like movies, going out for dinner, or coffee on the run until the holidays are over. There are some things in your budget you can trim back.
- Budget for everything – Not only should you budget for the gifts, but budget for small things we never think about like the gas to go to the shopping malls or if we pay for parking. Consider other expenses that will occur during the holidays like decorations, food, and drink for parties, greeting cards, postage if you are mailing cards or gifts, travel expenses, holiday apparel, and charitable contributions. Those are the small things that we don’t think about when we budget for the holidays.
- Make a complete gift list with the entire family present – This list should include everyone you are giving gifts to. Write down which family member will be receiving gifts, which one of your friends will receive a gift, as well as anyone else that should be acknowledge during the holiday season like teachers, bus drivers, the mail carriers, as well as the office gift exchange.
- Decide on who is getting what gift – Each person you are deciding on buying a gift for, set a firm “no more than” purchase price for the gift. Also be realistic: $25 might buy you a glove, hat, and scarf made out of cotton, but $25 will not buy you a 100% cashmere glove, hat, and scarf set. However, if disposable income is tight, designate half the list as “card-only people” or who will get “homemade or bake” gifts like cookies, ornaments, or knitting or crochet projects. Sometimes homemade gifts are more welcomed especially if children make them.
- Set on expectations with family members, especially children – If gifts are going to be minimal, start by advising the children early so they won’t build their expectations. Also now is the time to discuss reasonable and economically feasible gift-giving tactics, like grab bags, name exchanges, or skipping gifts all together.
- Start shopping early – We all know that late November and December will be the time for door busters and sales, but that also means you have to deal with big crowds, pressure to shop for everyone, and wrapping and mailing the gifts. Sign up for e-mail alerts from retailers early! Some of them have good sales before Black Friday. Save your sanity with people pushing you around and making you forget the true meaning of the holidays.
- Check your emotions at the store door – Gift giving deals are going to be all around us. With deals like buy 3 get 2 free, you will start overbuying gifts for people you don’t mean to buy for. Before you cash in on those deals, remind yourself what you owe: credit card debt, rent/mortgage, car payments. Is it worth not paying those debts so you can cash in on the deals?
- Work sales and don’t let them work you – If a gift on your list is on sale, buy it. If it’s not, is it worth going over your budget for or wait till there is a better sale?
- Keep track of spending – When it comes to budget, it is very easy to overspend with credit cards. Cash is king when it comes to being on a budget. Put your cash in an envelope. When the money is gone, it’s gone. If you use credit cards, it’s possible to go overboard and overspend which you will pay off your holiday debt over time and pay more in interest. Don’t enter the New Year handicap on your financial situation!
Do you have any other tips on how to budget for the holidays?