Holiday Budgeting 101
It’s easy to get caught up in the spirit of the holidays, as you try to buy the perfect gift for each of your loved ones. Unfortunately, when you overspend during the holidays, the magic of the season often falls flat when your bills are due. To avoid a post-holiday spending hangover, take the time to create a holiday budget now and stick to it.
Be Realistic
The best thing you can do to curb your holiday spending is to set a realistic but firm budget.
According to the National Retail Federation, most people spend nearly $1,000 on holiday expenses. This includes gifts and holiday items, as well as spending on non-gift purchases, like family photos or special outfits for parties.
To create a holiday budget, start by looking at what you spent last year. Consider the impact that spending had on your budget. For instance, were you paying off credit card bills for months after the holidays? Did you have to skip that getaway with friends or the summer vacation with family because Christmas was too expensive?
Be honest about the trade-offs that you’re making with your current holiday spending and remember how it felt last year when you didn’t have a budget. That will help you stay committed to rocking a holiday budget this year.
Evaluate Individual Expenses
As you create a budget, look at each expense and try to be as comprehensive as possible. These may include:
- Gifts for immediate family
- Gifts for extended family
- Gifts for friends, neighbors, and coworkers
- Travel expenses, such as gas, flights, and hotels
- Food and party supplies
- Christmas cards
- Postage and shipping
- Gift wrap supplies
- Interior and exterior décor
Add up what you plan to spend and determine whether that spending fits into your budget.
Adjust Expectations
Choosing an appropriate budget may mean you need to celebrate in a different way than in years past. If this is true, have an open conversation with your friends and family, and let them know if you need to opt out of traditional gift exchanges.
You can also arrange with family to do gifts of time and service instead of physical gifts. This may not be as exciting for younger family members, but some of your family might appreciate help with decluttering or organizing spaces in their home, sifting through family photos, or other helpful projects. Get creative!
Make a List and Check It Twice
Getting organized with your gift giving can help you take advantage of holiday sales and get the best prices on items. Keep track of your gift list and spending. And remember, there are apps that can help!
You can also try an app to find the best price on popular items or check prices between a few of your favorite online shopping sites. A few minutes searching can save you lots of money.
If you plan to shop at brick-and-mortar stores, set aside a dedicated day for shopping instead of lots of little trips. This saves money on gas and helps curb impulse buys. Just remember to bring your list and stick to it.
When you’re finished shopping, stop looking at fliers, email promotions, deal websites, and in-store sale signs. That way you won’t be tempted to buy whatever amazing deal pops up next.
Cash Out Rewards
If you use a credit card with rewards points or cash back, the holidays are a great time to put those perks to good use. This feels like “free money” you can use to purchase gifts, pay for travel, and more. Your card may even offer additional rewards or cash-back bonuses for spending at certain stores or categories. If this aligns with purchases you’re already planning to make, why not take advantage of it?
If you’re in the market for a new rewards credit card, the holidays can be an ideal time to sign up. Scott Credit Union offers several credit cards with no annual fees, cashback, and rewards. But remember, while higher holiday spending can help you hit bonuses that may otherwise be a stretch, only spend what you can reliably pay off before interest hits. Spending money you can’t afford to rack up rewards isn’t a bargain in the end.
Take Advantage of Holiday Loans
While the holiday season is all about celebrating and spreading joy, planning to celebrate the holidays and being able to afford them are two different things. A U.S. News & World Report survey says an estimated 4 in 10 people plan to go into debt to cover their holiday expenses.
Luckily, there’s a brighter way to keep the festive spirit alive without drowning in debt. Stay merry and bright while keeping your finances in check with a holiday loan from Scott Credit Union. With low interest rates and generous maximum amounts, a holiday loan may be a better option than going into credit card debt.
Plan Ahead for Next Year
If you’re tired of feeling the holiday pinch, start saving for the next holiday season now.
Break your targeted budget into doable chunks, whether that’s a daily, weekly, or monthly amount. Finding $25 or $50 in your monthly budget is a lot easier than trying to find $300 or $600 when the holidays roll around.
Even if you only plan to save half of the amount, you’re still doing your future self a favor.
Automate the process to make it even easier. Many financial institutions don’t charge for additional saving accounts, as long as you have automatic transfers every month. You can open a Holiday Club Account at SCU and set up recurring payroll deductions that help you hit your target.
As you budget for the holidays, just remember that the magic of the season doesn’t have to fade when the bills arrive. By being realistic and setting a firm budget, you can ensure the holiday season stays merry and bright.
If you do need some extra financial support, SCU is here to help. Learn more about our holiday loans and Holiday Club Accounts so that you can stay on budget this holiday season.
