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Planning for the holidays and staying out of debt all begin with setting a budget. The key is establishing your budget early on. That way you can spread out spending, rather than scrounging for money in the final weeks of December. Here are the strategies you need to build a holiday budget you can actually stick to.
Decide how much you can spend
How much did you spend last year? Take a look at last year’s credit card statements and you may be in for a surprise. Now think about how much you can spend this year without going into debt. Start with that number and see how far you can make it stretch to cover all of your holiday expenses.
Make a list of those expenses
Write down every little thing you might spend money on this holiday season. Common expenses are gifts, charitable donations, holiday cards and postage, shipping, wrapping supplies, decorations, holiday meals, baking supplies, alcohol, travel expenses, and holiday outfits.
Set gift-giving expectations
Know who you’re shopping for and how much you’re going to spend. It may feel like an uncomfortable conversation to have with friends and families but most people will be relieved to have a mutual gift giving understanding. If your family has grown, it might be time to suggest a white elephant exchange or drawing names.
Detail out your gift spending
For must of us, the vast majority of spending is going to go towards gifts. That’s why this area of the budget requires you go into a little more detail. Take your overall gift budget and divvy it out amongst all the people you plan to buy gifts for. Don’t forget the little gifts like hostess gifts or the gift exchange at work.
Set up a holiday “fund”
Tuck away holiday money into a separate place, whether it’s a (fee-free) checking account, a jar or an envelope. If you took $50 out of your paycheck each week, you would have $600 by the holidays.
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Look for extra ways to stash cash
Pick one expense you’ll cut back on throughout the holiday season. Give up the coffee shop for the next three months or start brown-bagging daily. Exchange loose change or gift cards for cash. Use these savings to beef up your account.
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Start shopping now
Now that the budget has been established, it’s time to start shopping. Go buy one gift and log it in your budget. Shopping early can relieve the stress of the holidays and ease the pain of spending in December.