The holiday season is a special time of year filled with meaningful traditions and fun memories. But it can also be stressful — especially if you spend it worried about money. The holidays can be tough for your finances when you don’t have a solid budget or spending plan.
But the end of the year doesn’t have to be defined by financial stress. There are several steps you can take to manage your money throughout the season so you don’t enter January feeling anxious or guilty about your spending. Follow these holiday budgeting tips to give yourself and your family a meaningful season without financial worries.
Holiday Budgeting Tip #1: Set a Spending Limit for Your Gift List
Before you start shopping for gifts, make a plan. Impulse buying tends to lead to overspending, so if you’re trying to keep your holiday expenses within a certain range, plan ahead. Choose a spending limit for everyone on your gift list — and stick to it!
Some people find it easier to stick to their spending limit when they shop online. Doing so allows you to check out prices at different retailers and take some time to evaluate gift options before finalizing purchases.
For example, if you’re trying to decide between two different options for a giftee, you can put both of them in your online shopping cart and take some time to decide before checking out. It’s harder to give yourself that decision time when you’re shopping in a physical store.
Holiday Budgeting Tip #2: Prioritize Holiday Experiences
For many people, holiday spending (or overspending) isn’t just about gift shopping. The cost of experiences can add up quickly! Whether it’s tickets to see The Nutcracker, a special family dinner at a favorite restaurant, or airfares to travel home for the holidays, experiences can be a significant expenditure.
When it comes to special events, money isn’t the only consideration. They also take time! And trying to fit every holiday event into your schedule each year can be overwhelming, which makes it harder to enjoy those experiences.
So before you start buying tickets and setting aside time to attend every holiday event, take some time to evaluate your priorities and talk with your family. Are all of those events truly meaningful to you? Or are some of them just obligations you feel like you have to attend?
Evaluate the time and financial cost of each event and decide if it’s truly worth the investment. If so, buy the tickets and enjoy every minute! But if not, there’s nothing wrong with opting out of activities that don’t bring you joy.
Holiday Budgeting Tip #3: Start Shopping Early
Last-minute shopping isn’t a fun experience for most people. Some may thrive on that pressure, but most people just feel anxious and overwhelmed. And that time pressure can make it easier to give in to impulse buys that exceed your spending limit.
Starting your holiday shopping earlier can help you stick with your budget. It gives you time to choose the ideal gift for each person and shop around to find the best deal.
Holiday Budgeting Tip #4: Don’t Forget About Charitable Giving
Is it important to you to make some charitable donations during the holiday season? If so, you can add those costs right into your budget. This is a good time of year to donate because many organizations serve more people (and have higher costs) during the winter months.
Remember to get a receipt, whether you donate money or goods (like clothing). You may be able to deduct those donations from your taxes next year.
If charitable work is important to you but your budget is tight this year, consider donating your time. Volunteer slots can fill up quickly during the holiday season, so if there isn’t any availability, consider setting aside time early next year to volunteer at the organization of your choice.
Holiday Budgeting Tip #5: Save for the Holidays All Year Long
Sometimes, even the best budgeting and spending plans don’t align with the reality of the holidays. If you end up with some extra credit card debt or a little less money in your bank account, don’t stress about it. Just make a plan to recover as quickly as possible.
And if you want a better chance at avoiding debt next year, start saving for the holidays right away. A simple way to do this is to make a category in your budget for “holiday spending” and allocate money to it each month.
Don’t spend those funds — just transfer them to your savings account (or a new “holiday funds” account). By putting that money in your budget as an “expense” each month, you’re more likely to save those funds instead of spending them.
A Good Holiday Spending Plan Doesn’t Have to Be Perfect
It’s easy to feel guilty or ashamed if you see your credit card statement in January and realize that you overspent your holiday budget. But those negative emotions aren’t usually very helpful when it comes to managing your money well.
If you’re already experiencing money guilt about your holiday spending, take some time to make a plan for the rest of your purchases. Set a spending limit that aligns with your budget, and opt out of holiday experiences that aren’t meaningful to you and your family.
If charitable giving is one of your values, set aside some money for donations. And keep track of your spending throughout the season. That way, you can go into next year knowing approximately how much you need to save throughout the year to cover next year’s holiday expenses.
Many people experience spending guilt and budgeting stress, but there are ways to overcome those issues. It starts with having a solid financial plan that’s centered on your values and goals. If you don’t have a financial plan yet, Guiding Wealth can help. Our financial planners will listen to your goals and help you build a customized plan that matches your priorities. Schedule a consultation today to get started.