As the holiday season approaches, we all have a lot on our plates. There’s the joy of the season, the fun of decorating your home, and the anticipation of gathering with friends and family. However, there is also the stress of how much money you’ll spend, tension about where you’ll put your house guests, and fear of how to dig yourself out of a financial hole if you end up spending too much on gifts and entertaining. Fortunately, when you predetermine a holiday budget and stick to it, you can release the stress and focus on the fun. Here is how to determine your holiday budget.
Assess Your Financial Situation
Before planning how much you can spend, you first need to know how much you have and your overall financial situation. Take a look at your income, how much you have in savings, and your current expenses. Get out the last few months of bank statements to make sure your figures are accurate and don’t forget to incorporate known upcoming expenses that will affect your overall budget.
Set Clear Goals
Don’t plan to do any spending just for spending’s sake. You need to have clear goals about what you want your money to go toward this season. Are nice gifts for the kids top of your list? Or is your goal to make extended family feel welcome by cooking wonderful meals and ensuring your home is full of holiday spirit? Or will you be the one traveling this year to be with family and do you need to make travel expenses your top priority? By having clear goals, you can better understand where your money needs to be spent in order to achieve them.
Create Your Spending Plan
Now that you know your goals and have a good overall financial picture, it’s time to create your spending plan. Create different categories, such as gifts, travel, décor, food and drink, and experiences, and allocate money to each. Remember to make sure that your goals align with how much you’re spending in each area.
Find Ways to Help You Stick to Your Budget
While it may be easy to create a budget, it’s much more difficult to actually stick to it—especially if you’ve spent freely in the past. To help you remember your budget, keep it as handy as possible and make sure you check in regularly to ensure you’re staying within its parameters. You might want to consider using an app or spreadsheet or even cash envelopes to help you keep track and set weekly meetings to go over current spending with your spouse, kids, or whomever else is involved.
Find Ways to Save if Needed
It can be alarming to discover you’ve already blown the majority of your budget and the holidays are still weeks away. However, all is not lost! You can always find ways to save and get back on track. This might include making your own gifts instead of buying them, hosting potluck gatherings rather than buying and cooking everything yourself, and watching out for sales to get what you need at the lowest price possible.
Always Have a Plan for the Unexpected
No matter how well you plan, the unexpected can still happen. That’s why it’s always a good idea to put a little extra into savings to use if needed. This will help you avoid stress and overspending and ensure that everything is taken care of for your family and guests.
The goal of the holidays is to make memories with your loved ones, not to stress over money! When you develop a budget and find ways to stick to it, you can avoid money worries and put your time and effort toward what matters most.
