Summer is a fabulous time of the year and also the time of the year when our wallets stretch to their limit. The holiday season can catch you off-guard when spending on holiday gifts, decorations, food, and family vacations.
Here, we share simple yet helpful tips which (hopefully) will make you stop and think. Whether you are trying to avoid the January financial drought or are a generous spender during the holidays, sing ‘Jingle Bells’ to the bank with these budgeting tips.
1. Create a Holiday Budget
This is so obvious but so true! The first step to saving during the holidays is to create and stick to a personalized budget. Your budget doesn’t have to be a masterpiece in accounting. Even a simple plan and a number in your head is already a budget (although it is better to have it written).
It is even better to start saving early so you have enough set aside for the holiday plans. Saving smaller amounts over a long period makes it easier to meet your budget needs.
2. Create Spending Categories
Setting holiday spending categories will make yearly holiday budgeting easier and more predictable. Be as detailed as possible when coming up with holiday spending categories. The idea is to cater for every expense you will have during the holidays for a better transition to the following year. Examples of spending categories include bills, decorations, gifts, travel, and food.
3. Set a Maximum Amount for Each Category
Now that your budget is set, calculate the maximum amount you will spend for each category. The most stressful category will be gifts, especially for people with large families and friends. List all the people you want to gift for the holidays. Use the money allocated to gifts on your budget to figure out the gift you will buy for everyone.
If the list is too long, you can tune your budget to accommodate it. Additionally, include an extra amount for unplanned expenses. You never know what might happen during the holidays, but you will be financially ready.
4. Review Last Year’s Holiday Spend
Use last year’s holiday spending if you need help setting a fixed maximum amount for each category. Pull up all the receipts and financial statements and use that amount to fine-tune each category. If you overspent last year, this is your chance to make it right and set a realistic limit this year.
5. Find the Right Place To Store Your Savings
Before you start saving, find out which saving options are available. You could go for a traditional bank out or a high-yielding savings account. A high-yielding interest account will help you stick to saving and get extra interest from your savings.
Another option is a sinking fund, which will help you save small amounts over some time. You can set up a target for your savings or use it to cater to all your expenses during the holiday. Always track your progress and stay consistent when saving up. With enough time allowance, you will be set for the holiday season.
6. Try Money-Saving Gifting Ideas
Gifting everyone in your family sounds expensive, even for small families. How do you save yourself from burying yourself in debt? Money-saving gifting ideas like e-cards, potlucks, and Secret Santa are here to rescue you. Secret Santa will help you save only for one gift, potlucks will reduce your holiday food expenses, and e-cards will reduce the hustle of buying and posting holiday cards to your loved ones.
7. Always Pay Cash or Use a Pre-Paid Card
Once you reach your holiday saving goal, take the money out and pay for everything in cash. Alternatively, a pre-paid card will work better when making online purchases because it’s limited to the amount loaded.
8. Be Careful With Credit Cards
Don’t get me wrong. There is nothing wrong with using a credit card for your holiday shopping. However, stay away from credit cards if you cannot restrict yourself to the limit or pay off your balance. If you use a credit card, use one with a low interest rate and track your spending. Alternatively, use a credit card to pay off anything you were to pay for with cash, then pay off the balance when the credit card statement is out.
9. Start Early
Begin your holiday shopping early to take advantage of sales and avoid last-minute panic purchases, which are often more expensive. This proactive approach not only saves money but also minimizes the stress associated with last-minute shopping.
10. Limit Impulse Buying
Stick to your shopping list and avoid impulse buying. Take time to think about whether a purchase is necessary. Ensure your holiday spending aligns with your budgetary constraints and financial goals.
11. Thoughtful Gifts Are Better Than Expensive Ones
Buying personalized gifts for your loved one is expensive. It’s hard to shop for some people because they seem to have everything. Worry not. You can opt for a thoughtful gift or give the gift of your time. Besides spending quality time with your loved ones during the holidays, you can use your skills and creativity to make a thoughtful, less expensive gift. Examples include framing a core memory or setting up a DIY station to bond as they use their creativity.
12. Use Apps That Help You Save Money
Technology has made your financial struggles easier. Most stores and brands have apps that give their users money-saving deals. Some stores offer their app users discounts and cash-back deals when they use it to shop.
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