If spending money during the holiday season puts stress on you and your finances, consider how budgeting can help you prepare and save money. Implement these holiday spending tips to budget effectively and stay on top of your finances throughout the holidays.
Why Budgeting for the Holidays Is Important
The holidays are a season of high spending. From gifts and food to traveling and decorating, many expenses are associated with the holidays. Creating a holiday budget is important because it helps prevent overspending, a common problem. About 70% of Americans overspend during the holidays. Many people lose track of spending, get carried away, or use irresponsible financing methods. Realistically, most people can't afford to spend the amounts they do during the holidays, and many go into debt as a result.
Budgeting helps you take control of your finances and can even help you enter the new year in a good place financially. Budgeting is one of the best ways to save for the holidays and spend realistically.
9 Ways to Navigate Holiday Finances Like a Pro
As you enter the holiday season, you likely have long to-do lists and lots of planning in mind. Before they begin, take some time to sit down and determine how you'll navigate your holiday finances. Managing your finances during the holidays can be easier than you think with these holiday budgeting tips.
1. Set Spending Limits
There are many ways to set spending limits for yourself. Start with the total amount you plan to spend over the holidays — including gifts, travel, and decorations. Next, break down where you'll allocate your money and how much you want to spend on each thing or person.
For example, if your total spending limit is $1,000 and you know you want to spend a majority of those funds on gifts for your family and friends, you may limit yourself to spending $750 on gifts. You can then break that limit down further to limit how much you'll spend on each person. This method helps you visualize where all your holiday money is going.
2. Cover Gifts and Expenses
While gifts are one of the biggest expenses during the holidays, many others often get overlooked, leading to overspending. Your holiday budget should also include any other anticipated expenses. For example, if you plan to travel, you should include the cost of gas, hotels, airfare, or other travel costs in your budget. Or, if you plan on hosting a holiday party, factor those costs into your budget too. Covering the cost of gifts and other expenses can help you determine where you may need to cut back.
3. Track Your Spending
Keep track of your spending so you know exactly how much you've spent and where you spent it. Keeping receipts can help you track spending and is helpful if anything needs to be returned. If you're shopping with a debit or credit card, regularly monitor your accounts. Even recording your spending on a notepad or spreadsheet can help you track where your funds are going.
4. Make Your Budget Early
The earlier you make your budget, the sooner you can start saving and eventually start shopping. When you start planning your holiday budget early in the year, you'll have a better idea of how to budget for other expenses throughout the year. Early budgeting also helps prevent scrambling for funds and last-minute, impulse shopping. Additionally, when you're able to start shopping early, you're more likely to find what you want and be able to get it on time.
5. Trim Down Your Budget
Another benefit of budgeting and starting early is the ability to trim down your budget. Cutting your budget back is especially important if you start budgeting and realize you can't comfortably afford what you originally planned to spend. With an organized budget, you can identify areas you can cut back or find more affordable options.
For example, you may decide to do a potluck holiday dinner where everyone brings a dish to share rather than buying and preparing everything yourself. Or, you may find ways to gift handmade, refurbished, or thrifted items rather than purchasing brand-new products, which are more costly.
6. Use Online Tools
Online money management and budgeting tools can be extremely helpful, especially if tracking your spending on a notepad doesn't work for you. You can find online tools for just about any aspect of budgeting. Whether you want to create a budget online, set monthly spending limits, or track all your spending in one place, online tools can help you stay on top of your holiday finances.
7. Open a Holiday Savings Account
If you plan to save for the holidays ahead of time, consider opening a separate holiday savings account. As you save, you can transfer money into this separate account to know exactly how much money you have set aside for the holidays. Putting your holiday money in its own savings account also reduces the chance of it getting spent on other expenses throughout the year.
Even putting a few dollars aside each week can give you a headstart on a holiday budget. Rather than having to dig into your primary savings account for holiday expenses, you may only have to dip into it since you'll have some saved over in your holiday savings account.
8. Use Coupons and Hunt for Deals
Coupons and discount codes are an effective way to save money during the holidays. For example, online coupon providers offer discounts and coupons and can help you find the best deals for everything on your list.
When considering deals, make sure to take some time to research prices to determine whether you're actually saving money. Some products may get marked up and discounted to appear as a good deal when you're actually still paying close to the normal price. Do your research and hunt for good deals rather than jumping the gun.
9. Pay in Cash
If you find that your spending gets out of hand when shopping with debit or credit cards, paying in cash can help you be more strict with your budget. Taking out your entire budget in cash helps increase your awareness of how your money is spent since you're physically giving it away each time you make a purchase.
Take Out a Personal Loan for Holiday Spending
Budgeting for the holidays helps you save money and prevent overspending. If you haven't started saving yet and are in a pinch for funds during the holiday season, consider taking out a personal loan with Atlas Credit. Holiday loans give you the money you need for your budget upfront without breaking the bank. Contact us for more holiday financial tips, to learn more about using personal loans for holiday spending, and fill out an online application today.