These days when we think of Christmas, we think of one thing. GIFTS. Toys, kitchenware, books, gift cards. The list goes on and on. But what some of us don’t think much about is our holiday budget.
If you’re like me, then there’s nothing you want more during the holidays than to get your loved ones that special gift they’ve hinted at. With the excitement of the holidays, it’s easy to throw a credit card or two at the cashier. And before you know it, you’ve found that gift and more.
But when January comes around, you may find yourself feeling the effects of that overspending.
Understanding the importance of a Holiday budget
During the year, most of us spend our time-shifting our money around. However, when Christmas comes our budget sometimes takes a little of a back seat. And it’s understandable. Christmas is the time for sharing. For making someone happy by receiving that special gift they wanted.
December brings with it extra expenses on top of your regular monthly expenses. According to Magnify Money, 44% of the consumer population took on debt during the 2019 holiday season. And those in that same category have admitted that most of their budget was spent on purchasing gifts.
One of the biggest negative factors of Christmas spending is taking on added debt. For many of us, we own at least 1 credit card which means an open window for splurging during this time. This also means in January a hefty credit card statement.
It was estimated that 78% of those who accumulated holiday debt is unable to pay it off by the next billing cycle.
Here’s why having a holiday budget is just as important as your regular budget:
- You continue to maintain a steady budget within the household
- A cutback on the stresses of carrying extra debt
- Gives you complete control of your spending
- Allows you to make smart decisions when spending
- Gives you some wiggle room for unexpected expenses
By having a budget for Christmas spending, you’re giving yourself the control to understand what’s important. And you’re also blocking out any added debt.
Being on one doesn’t have to be a death sentence for spending. Think of a budget as a way to still have control of your finances during the holidays. It allows you to not fall into the overspending trap.
3 tips for working with a holiday budget
Now that we understand the importance of a Christmas budget, here are some methods you can try.
1. Open a savings or holiday savings account
It’s always good to plan ahead. And there’s no better planning than opening a savings account. With a savings account, you can put away money over the months leading up to Christmas. Whether it’s $10 a week or $100 a month, you’ll give yourself the budget you need without putting yourself in further debt.
This savings account would be separate from your regular one. Or you can budget a certain amount within that savings for your Christmas spending. And be sure to keep track of the amounts that you put into the account so you’re not spending parts of your regular savings.
There are also some accounts called holiday savings or holiday club accounts. Some small banks such as Valley National offer their own form of these accounts, designed for holiday budgeting.
Basically, they’re short-term accounts opened for a certain amount of time. And by the end of the term, you receive a payout of the amount you saved. It’s a nice little nest egg for the holidays and can also be used to save up for vacations and more.
So be sure to check with your local bank and see what they have to offer.
2. Use a budgeting app or home savings plan
There are a ton of budgeting apps out there, some free and paid, that work wonders with helping you budget. And the best part is they’re all right at your fingertips.
By mapping out your expenses, you’re able to see where your money is going. I’ve personally used Mint and found it very helpful. Mint is set up to track your expenses monthly. With graphs, you get to see where your money is going as well as how much spending room you have left.
While it’s built for monthly budgeting, it can be a great tool for your holiday expenses as well. You’ll be able to stop yourself from going over budget during those critical times.
If apps aren’t your thing, then there’s nothing wrong with old fashion home budgeting. Try placing your holiday savings into an envelope in a secure place. And only take out money for what you’ve budgeted on paper for that day or item.
3. Research ahead of time
With the holidays comes new toys, electronics, and gadgets. And that means the hope of getting one of those items for a loved one. A good strategy would be to research the prices of items ahead of time.
Of course, as the consumer, we never know the true price until its released. But by researching the last model, oftentimes we can get an estimated guess of the pricing for the newer version.
For example, as a gamer, I know that a new console such as the Playstation 5 and Xbox X-series will run in price around $500 to $600. By looking at the two models before, I was able to get an idea of what the price tag would be.
Once you have an estimate of the prices, it makes it easier to budget your money around gifts. Try creating a list of the items you wish to get for others, have an estimated price, and save a little extra for each item. The extra is simply for a cushion in case you need to spend a little more.
Knowing when to say enough
By habit, we are overspenders and this is true around Christmas. And it’s during this time, we have to learn to tell ourselves when to say no. Remind yourself that there’s always another time for that purchase.
And ask yourself key questions like “Will I be able to pay this off by the next billing cycle?” or “Does this fit in my holiday budget right now?” As much as you may not want to think about it at the moment, it’s always good to have the full picture of your spending habits in mind.
I’m guilty of overspending myself around this time. And while I’m no expert at money budgeting, I have learned to ask myself these questions and more.
Here are some ways to stay out of overspending:
Conclusion
Christmas is meant for giving whether it’s in the form of emotion or gifts. By budgeting for your holiday spending, you can prevent yourself from carrying that extra debt into the new year. While it may be a little late for some of the methods here at the time of publishing, it’s always good to think about the future.
So, do you have a budget for this holiday season? What are some ways you keep from overspending? Are you thinking about setting up a holiday savings account next year? Feel free to share in the comments below. And don’t forget to pin, like, and share this post for others to enjoy as well.
Until next time, this is Tammy saying keep strong, keep positive. And NOTHING’s impossible!!! Happy Holidays Everyone!!!
