The festive season is just around the corner! Right now, you’re probably thinking about how to make the best of it, but if you’re not careful, the holiday spirit can take advantage of your wallet.
Budgeting For The Holidays
According to the National Retail Federation, the average American consumer plans to spend around $935 during this holiday season. That estimate is actually lower than last year’s, when the average consumer spent about $952, but it’s still a considerable amount of money that many of us don’t have to spend.
It’s critical at this time of year to understand how the holiday spirit can affect our spending patterns. Below, you’ll find a great selection of tips that you can use to plan how to spend during this season.
Plan Your Budget On Paper
Always decide how much money you are willing to spend before you begin your holiday shopping. Set a number and stick to it. Most of us focus on presents, but it’s important to consider every aspect of the holidays, including travel, decorations and food. Also include the smaller expenses, ones we tend to forget, like gift wrap and cards.
Set out your budget into different categories, and ask yourself how much you feel comfortable spending on gifts, the number of special events on your calendar, and the amount you will spend traveling. Factor in necessary travel and food expenses first, then subtract these numbers from your total budget to find the amount you can allow yourself to spend on gifts.
If, after summing everything up, the number still isn’t totaling your budget, then you should consider making some changes.
You don’t have to start budgeting for Christmas in November or December. Because the holiday season is often the most expensive time of year, you can start budgeting for your holiday shopping a whole year in advance. Start thinking about the holidays in January, when they’re far away, and set aside a sum of money each money to cover your gifts and travel. You can save $50 every month and have $600 to spend at the end of the year. You could even set up a separate savings account to cover your holiday shopping, so you’re not dipping into your nest egg when December rolls around.
Don’t Forget “Convenience Costs”
During the holiday season, convenience costs can add up to being a big inconvenience if you fail to set up a budget. Consider the amount of money you will spend when you grab lunch or coffee as you do your shopping. These hidden costs are known as convenience costs.
Set yourself a daily budget for these convenience items, say $10 to $20, just to keep yourself comfortable while you’re out and about. Remember also that gratitude and charity are big parts of the holiday season; you might be buying drinks or coffee for some of your loved ones, too. These costs are minor, but they can add up quickly and actually make a bigger dent than we expect at the end of the day.
Reduce The Amount of Money You Spend On Yourself
Self-gifting is fun, but it’s also a good way to overspend. Many of us feel an impulse to splurge on ourselves during the holidays, especially when other people aren’t giving us the gifts that we want. According to the National Retail Federation, almost 60% of people treat themselves during the holiday. You may choose to gift yourself by traveling to your dream country or buying presents. Don’t starve yourself, but remain inside your budget. Add a line for self-gifting and stick to the plan.
Look For Shortcuts While Traveling
In some families, especially large ones, the biggest expense during a holiday season is travel. That’s particularly true if you plan on flying somewhere. Celebrating together as a family is important; it may be the most valuable opportunity we have around the holidays. But always look for ways to cut down on the costs of travel.
Pack lightly to minimize your baggage. Bring along food in storage containers so you’re not eating out of every restaurant you pass. Before settling on a specific airline, shop around for the most affordable option.
Track Your Spending
Tracking your spending doesn’t have to be hard. A key aspect to tracking your expenditures is to do it daily. Since you’ve set a budget, you need to follow it diligently. Save your receipts. Then all you need is a pen and paper to record the items you spend money on. Later, during the week, compare days to each other, noticing where you spend the majority of your money and what you can cut out. Saving money is all about impulse control. It’s tough, so make it a game. Try to beat yourself by saving more money tomorrow. January will thank you for it.
Choose The Most Convenient Way Of Paying
There are two main ways of paying. You can choose to pay using credit cards, or just pay using cash. Discipline is key in both cases. If you already have a store-specific credit card, consider doing most of your shopping at that store; you’re likely to get a discount or earn points. If you don’t have a store-specific credit card, don’t sign up for one just to take advantage of a holiday offer. The more credit you have at your disposal, the more money you can spend that you don’t actually have.
Credit can feel unlimited. It’s a sort of curse, pushing off your payments into the future. Cash is often the better vehicle for saving money, because it’s inherently limited by the amount you have in your bank account. You can take out a specific amount of cash, staying within your budget, and there’s no risk of going over. If you choose to pay in cash, bring along only the amount that you have budgeted for. When your money’s run out, resist the urge to run to an ATM.
Set Your Expectations Early
If you’re trying to save this holiday season, it’s important to set realistic expectations with your family members and children. Consider setting up a Secret Santa this year when you go to visit your family. Instead of buying everyone a present, each participant is selected to buy a present for just one other person. That instantly cuts down on the amount of money that each person spends, and you can even set a total limit to the amount of money participants are allowed to spend, settling on a number that everyone feels comfortable with.
Try to avoid comparing the presents you buy to the ones that other people can afford. Maybe your sister got a great new job and she’s shelling out hundreds to buy presents. You don’t have to follow suit. Be clear with yourself about your own means.
As you are shopping, look for the best deals for your gifts by window-shopping. Always ask the vendors for the prices and see if there is a cheaper vendor somewhere else. Online shopping makes this a whole lot easier. Take advantage of deals offered on Black Friday and Cyber Monday. Today’s online aggregators make comparison shopping a breeze.
Think About Homemade Gifts
If you have some extra time on your hands, homemade gifts can be a great substitute for store-bought presents. Check your list of people who need presents. If you’re buying for loads of people outside of your immediate family, some of them might be happy to receive a plate of fresh-baked cookies, a cake or something that you crocheted. You don’t have to buy anything to spread holiday cheer. Try to be thoughtful, rather than expensive.