Christmas can be wonderful, but can also be the most expensive time of year. The older you get, the more people you know.
This means more gifts to buy and more holiday parties to go to. Christmas has evolved from a simple celebration to a blow-out, complete with long wish lists, fancy parties and far too many occasions that call for gift-giving and other expenses.
You potentially end up spending more money each year, so to be money-savvy at Christmas, create your own holiday budget.
Planning your holiday budget
Planning your holiday budget is best around September, yet here we are in the first week of December and you may not have yours yet.
List down everything that you spend on during the holidays:
- Christmas decorations for your home
- Gifts for the family
- Gifts for friends and workmates
- Wrapping paper and gift bags
- Food (holiday meals)
- Food you are giving as gifts
- Greeting cards and postage
- Clothes for yourself
- Travel expenses if you are going on holiday (airfare, accommodation, meals and other expenses)
- Donations to charity
Decide on the total amount you want to spend. Look at your bank account, savings and year-end bonus.
Check where you are in relation to your financial goals. This should give you an idea of what your budget is.
Make sure you’re being realistic. The last thing you want to do is get into debt because of holiday expenses.
Determine what takes priority
One of the things that will help you plan this budget is to prioritise. What’s most important is what you will spend on.
If it’s buying something really nice for your parents or partner, then other things will naturally take a back seat.
When you have the total budget in mind, you can make allocations for individual gifts and the other items on your list.
Fast forward to next year
For next year, open a separate account just for the holidays. Start as early as January.
Consider the total amount for your holiday budget for next year, top it by five to 10%, and then divide that amount by nine.
That’s the amount you need to save monthly. By the time the last quarter of the year rolls around, you’re set.
You’re ready to go Christmas shopping as early as October, thereby beating the holiday rush.
Some women do better with weekly savings. This is fine, too. Divide your total holiday budget by 36 – the number of weeks from January to the end of September.
Put aside that amount weekly and you’re set for the season, two months ahead of time.
What if you’re short on your holiday budget right now?
It’s the first week of December and you don’t have enough for your holiday budget. What can you do right now to earn some extra money?’
Here are some suggestions:
• Give something up – like your daily trip to your favourite coffee shop. Bring a sandwich from home instead of going out for lunch. No movies. Everything counts, and everything adds up.
• Try a financial fast. Not food, but everything else that’s an extra in your life. After your grocery shopping, do not spend anything at all except for transportation.
• Gather all your loose change. See what you can do on the side, like babysitting, house sitting, pet sitting or pet walking.
• Make some side income. Offer to clean homes just before the holidays. Do your nephews and nieces need extra tuition?
One final tip on holiday budgeting
Proper planning is key. It’s late in the year, but thankfully there are a few things you can still do in order to save up some money for your holiday budget.
No matter how convenient using your credit card is, in order to prevent overspending, using cash is always better.
If you’ve already set a budget for the holiday season, having it in cash makes it easier to control. If you don’t have it, you can’t spend it.
Planning is everything, and if you plan early, you’ll have a comfortable amount by the time you start making a list and checking it twice.
This article first appeared in The New Savvy.
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