By: America Saves
Holidays are often an exciting time of the year. Spending time with family, enjoying time off work, and celebrating with family traditions are enjoyable activities. However, the holidays can also represent added stress due to the crunch on your wallet.
It is hard to look forward to a holiday if you are worried about how to pay for it. Have you stressed about how to provide a fun experience for your family without breaking the bank? Decorations, gifts, and food expenses add up quickly.
To avoid this financial strain, it is important to plan for holiday expenses throughout the year. America Saves has compiled some tips to help you plan for a fulfilling holiday season while not drowning in expenses.
Develop a Holiday Budget
One way to reduce impulsive spending is to develop a budget that includes clear expectations for travel, food, entertainment, and gift-giving expenses.
- Set your spending limit before you start budgeting. And stick to your limit. That might mean making some compromises. Decide what you will spend on each person before going shopping. If possible, talk with family members and friends to set a spending limit that everyone can spend on each gift.
- Be as comprehensive as you can when you create your budget. Make a list of everyone who will receive a gift as well as all items that will cost money during the holiday season. Some items often forgotten include gasoline, babysitter fees, eating at restaurants more often, and so on.
- Reduce your spending. Add up the total of your holiday list, and don’t be shy about reducing it some more. Challenge yourself to spend a little less each year. Consider writing handwritten notes expressing thanks or appreciation rather than buying gifts when possible to reduce your spending costs.
- Divide the list into necessary items (needs) and extra opportunities (wants). For example, gasoline is a needed expense for traveling while eating out at restaurants while on the road is an extra expense that can be avoided if needed. Dividing your list will help you save for all necessary expenses and provide a list of ideas in case extra money is leftover.
- As part of your budget, determine how you will pay for each item. Paying with cash will help avoid unexpected spending. Paying with a credit card without keeping track of spending may cause you to forget purchases for which you’ll have to pay later. If paying with layaway, look out for hidden fees and be sure to budget for any interest added.
- Carry a copy of your budget with you, and be sure to follow it while in stores. Once a budget is made, it can still be hard to follow. In-store sales are tempting, but making impulsive purchases, no matter how small, can add up quickly.
- Plan your shopping trips ahead of time by reviewing store ads for upcoming sales. This step will lower costs while also helping to reduce impulsive decisions while in the store.
- Remember to save. Continue saving over the holidays so you don’t shortchange your retirement, education, small business, or other goals. Stick to more long-term savings goals and avoid the accumulation of new debt.
Consider the following tips for the upcoming holidays:
- Cooking an entire holiday meal on your own can be expensive. Consider having a potluck with friends and family to avoid cooking or paying for the entire meal yourself.
- Keep the menu simple. Dinner can be special without two different types of meat, four vegetable dishes, and three different desserts. If you plan to serve mashed potatoes and gravy, you can skip the macaroni and cheese casserole. If you plan to make candied carrots, no need to serve candied yams also.
- Plan for meals ahead of time to take advantage of coupons and grocery deals. Advertisements about upcoming sales can be found online and in local newspapers. Using in-season produce for recipes can often reduce food costs.
- Reduce travel expenses by visiting out-of-town families for one holiday during the winter season (such as just Thanksgiving or only Christmas, rather than both holidays).
- Consider setting up new holiday traditions that cost less. For example, some families or friend groups use “Secret Santa,” where each person draws a name randomly so that each person receives a gift and each person only buys a gift for one person.
- Consider spending time together rather than gift-giving. Other ideas include a nice dinner out or playing games as a group.
When it comes to holiday spending, the important thing is to stick to your budget. We all want holidays to be special, but if you create debt in the process, it will end up being more of a headache than a holiday.
Spending less is just the first part of a successful financial plan. Put away the money you save during the holidays into a savings account for future expenses, both anticipated and unexpected ones. Those with a savings plan are twice as likely to save successfully. Let America Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself to save. That’s what our pledge is all about. Learn more about how to save money for the future here.