Budgeting for the Holidays: Why and How You Should Start Now
The holidays can be a dangerous time for your bank account. And while you may be cringing at decorations going up in the mall too early, it’s certainly not too early to begin your holiday budgeting.
The earlier you begin budgeting for the holidays, the more smoothly the holiday season will go for you and your finances.
Make a List & Check it Twice
While you may not know exactly what gifts you want to give everyone this holiday season yet (and that’s okay!), you probably have an idea of who you’re planning to give to. Start making a list of everyone you’re going to buy gifts for and estimate how much you feel comfortable spending on each person. You may also want to include a cushion for those unexpected gifts that pop up during the season. But remember, gift-giving is not the only part of budgeting for the holidays. Consider estimating what your holiday-season costs will be for any hosting you’ll be doing, including parties or the holidays themselves. Once you’ve estimated your gift-giving costs and other holiday expenses, you’ll have an idea of how much you’re going to spend this holiday season.
Start Saving Now
Once you have a ballpark figure of what your holiday expenditures are going to be, start making a plan to save if you haven’t already begun. Having a set plan will be key for successful holiday budgeting. Compare how much you’re going to spend to how much time you have until the holidays. If you can, set aside a certain amount each week or each pay period to reach your goal. However, if your monthly budget is already tight and you don’t have room for holiday savings, you may need to make some adjustments. First, assess whether you can cut back in any areas. This would only need to be a temporary cut to get you through the holidays. If you don’t have anywhere to downsize, consider finding ways to bring in some extra cash. The holidays offer a myriad of seasonal side gig opportunities to take advantage of.
Decide How You’ll Spend
Cash or card? Knowing how you’re going to pay for your expenses will help with the holiday budgeting process as well. Cash, debit cards and credit cards all have their advantages and disadvantages when it comes to holiday shopping. Using cash can be beneficial to track your spending. You may want to take out your holiday spending money in cash and keep it in a separate envelope. Then when you spend it, you’ll be able to physically see how much you have left. It will hold you accountable and keep you out of debt. A debit card will similarly help you avoid debt, but you’ll have to take a more active role in tracking your spending.
Many people prefer to do their holiday shopping with credit cards. One of the major benefits of paying with a credit card is the ability to earn rewards for your purchases. However, this should be the main draw of using a credit card. You should try to avoid the lure of using one for the reason that you can buy now, pay later. This mentality will often lead to spending more than you can actually afford. If you’re not able to pay off your balance in full, you’ll negate the worth of your rewards and land yourself in debt. The holiday season is a very dangerous time to get into debt. As a result, you should consider only doing your holiday shopping on a credit card if you can pay off the balance in full in a timely manner.
The more prepared you are for the holiday season, the less of a burden it will be on you and your finances. Escaping the holidays without going into debt may seem impossible, but it’s not! Budgeting for the holidays and saving early can help you start the New Year without debt weighing you down.
For more tips on staying out of debt, contact the debt professionals at Tayne Law Group!