The holidays are one of the best times of the year. Celebrating with family, sharing a meal, or exchanging gifts are just some of the ways this time of year feels special. While gift-giving can be one of the most enjoyable parts of the season, it can also put pressure on your budget. Higher winter expenses, holiday travel, and the desire to find the perfect gift can make it easy to overspend.
Below, we'll walk through some simple tips to help you save money and thrive this holiday season. Remember, the goal isn't to spend less just for the sake of spending less. It's to create a plan that lets you enjoy the season without financial stress being carried into the new year.
Calculate a Baseline
To help yourself budget successfully, it's important to set a realistic total spending limit. This starts with calculating a baseline. Review your monthly take-home income and subtract non-negotiable expenses, such as rent, mortgage, utilities, debt payments, and groceries. Keep in mind that utility bills may be higher during the winter season. Once you've accounted for your essential expenses, you'll have a clearer picture of how much you can comfortably dedicate to holiday spending.
List every category you expect to spend money on. This can include gifts, holiday decorations, wrapping paper, cards, food, or travel expenses. Each item can add up quickly, so it's important to plan and budget well.
Track Each Transaction
Whether you use a digital banking app, a journal, or a notes app on your phone, tracking holiday purchases can help you stay within your budget. As you purchase the gifts on your list, plan the holiday meals, and calculate the costs of traveling to and from a destination, seeing the numbers laid out and having a running total can be very beneficial.
You may even take it a step further by reviewing your progress once a week. Pick a specific day of each week to review your spending and make adjustments before small expenses become larger budget concerns.
Shop Smart and Know When to Stop
For many, gift-giving is a favorite part of the holiday season, but it can also be a strain on your budget. It's easy to see something in the store or online and think it would make the perfect gift for someone, but if you've already purchased the gifts you planned and spent the amount you budgeted for that individual, it's important to resist the urge to spend more.
Refrain from making any immediate purchases. Research items before you buy, compare prices, and consider reading customer reviews. Taking a few minutes to research potential purchases can help you save money and avoid buyer's remorse. Once you have completed your shopping, try to stop. If you're already near your budget for the season or have completed your shopping list, resist the urge to make any additional purchases.
Avoid Unnecessary Debt
According to LendingTree, consumers added an average of $1,100 to $1,250 in credit card balances during the holiday season. Due to gift purchases, holiday travel, hosting, and decorations, balances tend to spike every year. Those extra expenses may seem manageable in the moment, but they can quickly add up and linger well beyond the season.
While many people pay off those balances early in the new year, doing so can still create financial stress long after the holidays have ended. By planning ahead and setting spending limits, you can enjoy the holiday season without the added stress of lingering debt.
The holiday season is a time to celebrate, give, and make memories, but that doesn't mean you have to overspend to enjoy it. By setting a budget, tracking your spending, shopping with intention, and avoiding unnecessary debt, you can enjoy the festivities while keeping your finances on track.
