Holiday Budgeting 101
According to a 2016 holiday debt survey conducted by MagnifyMoney.com, they found that 65.2% of consumers who took on holiday debt did so unexpectedly, and didn’t budget for the extra expenses.
The holidays are a very hectic time of year and whether your gift-giving style is Scrooge or St. Nick, you need to stick to a budget plan to help keep the season merry and bright! Budgets come in all shapes and sizes, from holiday gift lists to purchasing a new home. What all budgets have in common is that they give you the ability to help you achieve your goals without compromising your financial security. Starting early on a holiday budget, or any budget is important. Getting ahead of the game also lets you keep an eye on sales to save money. Learning how to budget this holiday season will help you avoid accruing a holiday financial hangover!
Luckily, we’ve compiled a list on how to master your holiday budget so you can avoid a financial crisis:
1. Budgeting 101
In order to be able to stick to a budget, first, you need to understand how one works. A budget consists of two equally important components – income and expenses. Most Americans have some sort of debt and there should be no shame in having financial trouble. Falling into debt can happen quickly, it’s important to recognize financial strain. All debt is good debt until it becomes unmanageable. Setting a budget can also help decrease stress and worry over funds. In order to execute your budget, you need to be aware of your spending, track your income and assess your lifestyle. It’s essential to be aware of the difference between things you want and things you need.
2. Setting your Budget
In creating your holiday budget, initially, you need to decide how much you can reasonably afford to spend – which means how much can you budget for. The funds you will be spending should come from your current disposable income. You don’t want to be racking up a huge credit card bill that can take months to pay off well into the New Year. If you begin to budget months before the holiday season, you will be able to free up some cash flow to avoid plummeting yourself into debt over holiday expenses. While you may not be thinking about the holiday season in June or July, it can save you from financial stress later on.
3. Make a List & Check it Twice
Next, make a list of who you are going to give to and what you will be purchasing for that individual. You need to be able to budget for everything, not only gifts but parking, gas, holiday cards, etc. Life is full of hidden expenses, make sure to leave a little wiggle room in your holiday budget. Additionally, it’s important to decipher if you really need to give a gift to a family member whom you haven’t seen in a few years. It might feel like holiday spending is essential, however, it is a lifestyle choice.
You are in control of how much you wish to spend. If your financial situation is tight, or you just can’t give to everyone this year, then consider asking friends and family if they might be interested in putting a cap on gift spending or maybe suggest a grab bag or Secret Santa with a spending limit. You may feel uncomfortable making this suggestion but your friends and family will understand and may even love your idea of a Secret Santa instead, especially if you make it fun!
4. Stay Focused, Keep Track of Spending
It can definitely be easy to get distracted during the holiday season with so many offers, sales, and discounts being advertised. It’s true what they say “Cash is King.” Maybe you will want to leave your credit cards at home when you do your holiday shopping and bring a debit card for reassurance in case of an emergency
Plus, not only can shopping in late November and December lure you into spending more money, but the stores will be packed. If you already have an idea on what you want to get loved ones this holiday season subscribe to the retailer’s email list as soon as possible to take advantage of coupons and sales. You are really going to need to execute self-control while shopping. Be sure to carry your list and stick to it. You may want to consider reviewing your list every time you make a holiday purchase to ensure you’re staying within the funds you allocated.
Don’t start the New Year off on the wrong foot, make your holiday budget as soon as you can and start shopping! If you need assistance in creating your budget you can purchase Leslie Tayne’s book Life & Debt or call Tayne Law Group to see how we can further assist you with your debt. The holidays should be a time for joy and cheer. By simply planning ahead you can save yourself from financial doom.
Remember sticking to a budget is all to help you live within your means and stay financially healthy!