During the holidays, you are supposed to focus on happiness, the spirit of giving and enjoying time with your family and friends. But, from gifts to decor to the parties and food, the holiday season can really add up. You may find yourself thinking more about the financial strain instead.
You have to be mindful of the cost of these special occasions. Saving for the holidays is important when you think about how much money you actually spend.
Putting your financial health in jeopardy with careless shopping is not smart. However, having a plan in place to control your expenses is. Here’s a step-by-step way to create a budget for the holidays.
How To Create A Budget For The Holidays
Write Everything Down
Get a notebook or create a Document in Microsoft Word or Excel. I personally prefer the digital method because it’s easy to add in items as you think about them and to categorize things on your list.
Write down every single item you will spend money on during the holidays. Use the list below as a guide:
- Gifts- make sure you specify every person you want to buy a gift for
- Christmas tree
- Candy/ Other treats
It may surprise you just how many items you purchase over the holiday season. Here’s a handy spreadsheet you can use.
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Make your way through your list and estimate the cost of each item on it or write down your spending limit.
Now that you have an idea of how much your holiday spending will cost, it’s time decide whether you are comfortable with that figure. On one hand, you might be happy with what you’ll be spending and can afford it. If that’s the case, great! Move on to the next step.
On the other hand, you might be shocked at the amount and, if you are, then it’s time to make some changes. Take a look at your list and choose all the items that are not important to you and your family. What can you cut out or scale back on?
Gifts might be a great place to start:
- Dedicate less money to spend on each person on your list and find deals online or use coupons to save that extra cash
- Buy one gift per child
- DIY gifts if you’re crafty
- Don’t buy gifts at all. When times got tough, my significant other and I did not exchange gifts. Instead we spent quality time together and had a blast creating memories instead of spending money we didn’t have on gifts the other person may not even like or use.
You now know exactly how much you want to spend for the holidays. Whenever you shop, make sure to track your expenses. Do not skip this step!
When you purchase an item off your shopping list, be sure to keep the receipt and track it on your budget sheet.
If you end up spending less than the dedicated amount, you can either add that to the total amount for something else or save it.
Saving money for the holidays is easier when you plan ahead and start early. There are more opportunities to save money when shopping for items like gift wrap paper out-of-season and when you take advantage of sales like Cyber Monday.
If you will be making your own gifts, start earlier in the year. Doing this gives you plenty of time to find materials and create presents.
Planning for your holiday budget early also allows you to set aside more money over time. Each month, you can add a few dollars to a separate fund. By the end of the year, when you are ready to shop, you’ll have a nice amount of cash to use. This will certainly lessen the financial pressure of the holidays and help you to avoid using credit cards.
Creating a budget for the holidays is smart and certainly beneficial to your financial well-being. Having a plan in place will leave you more relaxed and better able to enjoy what these special occasions are really all about—creating wonderful memories with family and friends.