Planning for the holidays can be an arduous task, especially if you have to do so on a budget. There are usually loads of activities and demands that can cause you to exceed your budget. However, you do not necessarily have to restrict yourself to stick to your holiday budget. While making a holiday budget seems more manageable, the challenge is with sticking to it. If you seek tips to help you stay on track with your budget during the holidays, this article has you covered. Therefore keep reading to learn more about it.
What is a holiday budget?
A holiday budget is a financial plan for the holiday period. Essentially it is similar to a household budget where you draw up a plan for the holiday activities and how much you are willing to spend. It will primarily involve lots of adding and subtracting to balance things up. You can either draw up your holiday budget on paper or using an Excel spreadsheet.
Why make a budget for the holidays?
The holidays are usually festive and carefree. And, there is a high tendency to spend above your financial capacity. Therefore a holiday budget is handy to guard against being a spendthrift. Also, you need a budget for the holidays to save yourself from going bankrupt afterwards.
Tips to make you stick with your holiday budget
Generally speaking, the aftermath of an extravagant holiday becomes problematic when you have to go through your financial records. As a result, to help you stick to your holiday budget, here are a few tips to keep you covered.
Draw up your budget
Even though it takes more to stick to a budget than drawing it up, creating the budget is the first step towards ensuring you stick with it. The reason is that without an actual financial plan, you have nothing with which to work. As a result, you can hold yourself accountable for your holiday expenses and spend intentionally with a laid down spending plan.
Determine how much money you have available to meet the holiday budget this year now that you know where your money is going. It’s critical to examine your budget and determine how much money you have left over to spend throughout the holiday season.
When evaluating this amount, be sure that you only use money that you have put aside or additional money in your budget. It is critical not to spend more than you have saved initially with the intention of paying it off later.
When shopping for the holidays, you may wish to stick to a cash-only strategy. Using a credit card for the gifts makes it easier to overspend. Credit card interest rates are virtually usually in the double digits, and a $1,000 charge to a credit card for holiday items paid back at the minimum payment could end up costing you $1,800 or more.
Set up a spending limit
It is by far easier to stick to a budget when you have a spending ceiling over your purse. Essentially, it works by setting up the financial limit beyond which you cannot make more expenses. The reason is that you need to prepare for the period after the holidays. And your spending limit saves you from running into debt. Therefore you should figure out how much you are willing to spend, which should come from your available funds and not your savings.
Make a list of your proposed expenses
Going for the holidays with a list takes the edge off and helps you go through the festivities like a cruise. It is just like going grocery shopping with your list in hand. Essentially, you are more confident about effectively managing your funds with a list. Examples of items to put on your holiday list include travel fare, feeding expenses, lodging/accommodation, gifts, tips, clothing, holiday activities, charity, etc.
Actively keep track of your expenses.
It is a lot easier to stick with your holiday budget when you track your expenses. And keeping financial track of your holiday spending works well when you have a list. Essentially, it is a follow-up action to making a list for the celebrations. There are a couple of methods to track your spending, from manual to automated processes. In addition, you can also set up a separate account to keep financial records of how you spend your money.
Take your gift list and holiday budget sheet with you on every shopping excursion. Additionally, keep note of the cost of your holiday-related activities and other expenditures so that you can budget more properly next year.
As you start buying gifts and spending money, make sure to deduct the amount from your running Christmas budget total. This will show you how well you are sticking to your holiday budget and make it easier to make changes between categories if necessary. Tracking your spending is the most important factor in keeping to your holiday budget.
Create realistic expectations
Unrealistic expectations are the primary culprit behind not sticking to your holiday budget. As a result, before going for the holidays, setting reasonable and realizable expectations is necessary. That way, you can be sure that your proposed activities and expenses are within your budget. And you have no temptation to draw from your savings or even go on borrowing and acquire massive debt.
Other Ways to Save Money Over the Holidays
Individuals will differ in how they spend and save for the Christmas season. However, if you plan ahead of time, you can lessen the financial burden of the holidays.
Other ways to save money throughout the holiday season are included below.
- Profit from Black Friday and Cyber Monday deals. Many businesses offer pre-holiday deals, which are a wonderful opportunity to get ahead on your shopping and save money. Reviewing your list and sales ahead of time might help you save the most money.
- Do the majority of your buying online. Shopping online can save you money and time because it allows you to compare prices and locate the best deal. Remember to hunt for free shipping codes and give yourself plenty of time for your gifts to arrive.
- Make homemade gifts for your loved ones. Homemade Christmas gifts are a terrific way to save money while still showing the gift recipient how much you care about them.
- Give experiences instead of physical stuff. While physical gifts are wonderful, sometimes experiences are more valuable. Rather than purchasing an at-home cooking set for your daughter who aspires to be a chef, try purchasing culinary lessons for the two of you to do together.
- Begin saving as soon as possible. If you set aside money each month to cover your holiday bills at the start of the year, you will be much less stressed when the time comes. Check your last year’s budget to determine how much you spent, then divide that amount by 12. This is roughly how much you should save aside each month to cover the next year’s holiday expenses.
- Maintain a realistic holiday budget. It can be difficult to handle the pressure and want to offer holiday gifts, forcing many people to make difficult financial decisions about what to sacrifice in order to give.
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Why is a budget important for the holiday?
The tendency for excessive spending necessitates a holiday budget. The reason is that it helps you with making informed choices that serve your overall financial benefit. In addition, it keeps you on top of things financially, even after the holidays are over.
What are some examples of travel expenses?
Travel expenses can range from transport, feeding, tips, airfare, lodging/ accommodation and even communication. Essentially, those travel expenses you incur during an indefinite work assignment and exceeding one year, according to the IRS, cannot be deducted for tax purposes.
Why is it so hard to stick to a budget?
Sticking to a budget requires a great deal of pragmatics. As a result, when your budget is not attainable or unrealistic, you stand a greater chance of falling short. For example, you might make an excessive deduction or underestimation about not needing something. And realize you needed much of it. That way, you might be forced to deep hands into your reserves to foot the unplanned bill.