As the holiday season approaches, it’s important to remember that joy doesn’t have to come with an expensive price tag.
According to a 2020 Gallup poll, Americans will spend an average of $852 on gifts this year, but the spending doesn’t stop there. Some people may spend money on holiday parties, decorations, holiday travel, and charitable giving, which can create a hefty end-of-year bill.
As you go into the holiday season, stick to the spending tips below to help you navigate a budget strategy.
1. Set a Holiday Spending Limit
The first step to taking on the holiday season is to determine how much you can afford. Ideally, what you spend on the holidays will come from disposable income rather than credit cards or savings.
If you’ve put aside money all year, then you can check your funds to see how much you have for the season. If not, it may be time to assess what your sources of money are. End-of-year bonuses or side hustles are a great way to add to your holiday fund and won’t require you to slim down your budget in other areas.
2. Make a List
Once you’ve determined how much you have to spend, it’s time to decide where the money is going. Start by writing a list of everything you’re planning to purchase. Consider the following:
- Gifts: Write down a list of people you’re shopping for and what the budget is for each. If it helps, you can also list the gift ideas you have for them so you can assess what you can afford. Include everything from stocking stuffers to Secret Santa games at work. The more you write down, the easier it will be to manage your budget and plan.
- Holiday Cards and Postage: Do you and your family send out an annual holiday card? This expense is easily forgotten, but depending on how many people you’re sending it to, can add up quickly. Are you buying premade cards at the store or having a personalized one printed with your family’s picture on it? How many stamps will you need? Who needs a card mailed versus who will be receiving one by hand? These are all costs to consider in the holiday budget.
- Wrapping Supplies: If you’re going to be wrapping each gift, you’ll want to make sure you budget for wrapping paper, decorative bags, tissue paper, name tags, bows, ribbons, boxes, and any other supplies you may need. You can slim down your budget by reusing supplies from last year, or by visiting the local dollar store for discounted materials.
- Food: The holidays are the perfect time to gather with friends and family, so food costs should be a major consideration in the annual holiday budget. Are you attending a potluck at work? Hosting a dinner? Making gingerbread cookies with your kids? Consider all the holiday food you’ll need to spend money on and factor it into your budget.
- Travel: If you’re traveling for the holidays, it’s important to list every expense you’ll have on your trip. Consider fees for airfare, checked baggage, airport parking, Uber or Lyft rides, pet-sitting, rental car, toll tags, and any other charge associated with your form of travel.
- Charitable Giving: If you’re going to give back to your community during the holiday season, make sure you calculate how much you can afford. Are you donating toys, volunteering at a soup kitchen, collecting items for the local shelter? Take every expense into consideration and reach out to your community for additional support for your cause if needed. The more the merrier!
- Decorations: It’s hard not to get distracted while shopping during the holiday season, and if you’re like most people, you’ll probably add a decoration or two into your cart. Make sure you take these shopping trips into account before overextending your budget. Do you really need more ornaments for your tree? Make sure you plan ahead and only spend money on what you need.
Once you’ve compiled a list of expenses, review it again to make sure you didn’t miss anything. You can even add a section titled “Other” or “Miscellaneous” to budget for unexpected needs throughout the season.
3. Track Holiday Expenses
Once you’re ready to start shopping, make sure you bring your gift list and budget with you. This will help you stay on track as you navigate the holiday shopping season.
To make it easier, you can even use budget tracking apps, such as Intuit Mint or Spendee to help you manage your spending. By doing so, you’ll be able to see where you are overextending your budget and where you may need to adjust.
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4. Get Creative with Gift Giving
Just because it’s the holidays doesn’t mean you have to spend money, and in most cases, the best gifts come from the heart. Consider making your own gifts or writing up a fun “coupon.” Some ideas include:
- Knit or crochet a scarf
- Bake cookies or other holiday desserts
- Make a hot chocolate kit
- Paint or draw a picture
- Write up “free babysitting” cards for your friends and family with kids
- Write up a “dinner and a movie” coupon for your best friend or loved one
- Volunteer with your friends and family instead of giving gifts
5. Budget Holiday Hacks
Whether you’re gifting a DIY present or gathering items at the mall, you’ll definitely need supplies. To maintain a good budget, make sure you use coupons and track discount deals at your favorite stores to ensure you’re saving the most that you can.
Shopping for Black Friday or Cyber Monday is another great way to save additional funds on items you’ll need for gift-giving. Stores like Target and Walmart start their holiday deals earlier in the season, so make sure you sign-up for emails or track discounts in the app while you’re shopping. After the season is over, be sure to unsubscribe to prevent future temptation.
As you enter the holiday season, remember that simply being with friends and family is a great way to show them that you care. But if you find yourself wanting to spend money, the tips above are a great way to stick to your budget and maintain healthy financial habits through the season.