If you don’t want to start off a brand new year with a brand new amount of debt, it's time to get spending under control now.
Afterall, January 1st should be a fresh start...not a time to be nervously checking a credit card balance ignored since the cash set aside for gifts and holiday travel ran out somewhere around the first week of December.
Creating a budget isn’t always simple. With multiple family members to buy for, holiday meals to consider, and the possibility of travel expenses to take into account, a holiday budget can have as many line items an office expense report. But don’t avoid this important task simply because you aren’t sure of where to start. Instead, use these tips to get started right away:
6 Tips To Take Control of Holiday Spending
1. Determine How Much You Can Spend
One of the most common mistakes made while drafting a holiday budget is allowing your expenses to determine how much you are going to spend. If your gift list is in charge of your wallet, the chances are high you will end up spending too much. Instead, the very first step in any holiday budget should be deciding how much money you can spend this year without going into debt or neglecting other household expenses. Decide on an amount and write it down to keep yourself accountable.
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2. Outline Non-Gift Expenses First
Gifts aren’t the only expense you can expect during the holiday season and they definitely shouldn’t be the only line-item in your budget. Non-gift expenses should be carefully planned out or you could easily end up overspending this year.
Some of the most common expenses to take into account are travel expenses, food related expenses if your are hosting a meal or attending a potluck, seasonal decorations and holiday outfits for yourself or your children. If possible, make note of what you spent on these items last year and allow those numbers to guide your budget.
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3. Create A Gift List
Once you have decided how much you will be spending on non-gift expenses, the money left in your budget can be spent freely on gifts for your friends and family. Of course, you don’t want to spend haphazardly, since you likely plan to spend more on certain people than others. Create a complete list of the people you plan to give to, from your children, siblings or parents to your mailman or coworker. Using the money left in your budget, determine exactly how much you can spend on each person before you ever step foot in a store.
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4. Build In a Small Cushion
In a perfect world, you would never step outside the boundaries set by your new and improved holiday budget. Of course, emergencies do happen. If possible, build a small cushion into your budget to avoid falling back on your credit card if something unexpected comes up. If you never spend your emergency cushion, reallocate it for a night out or throw it into your travel fund as a reward for sticking with your budget.
5. Communicate Openly and Honestly With Your Family
If this will be the first year you'll be closely following a budget, be honest with your family about what to expect. Chances are, no one will be upset by your decision to scale back or give smaller, more thoughtful gifts. In fact, you may find your decision to stick to a budget this year might come as a relief to family members who want to scale back but aren’t sure how to approach the subject.
6. Document What You Learned for Next Year
Budgeting mistakes are only wasted if you don’t learn how to do better next time. After the flurry of the holiday season winds down, take a few minutes to reflect on what you learned from your budget this year. Did you budget too much or too little for a certain family member? Did a non-gift expense arise that you had completely overlooked when you created your budget? Write those down so you can avoid making the same mistake two years in a row.
Remember, the goal of creating a holiday budget isn’t to suck the fun out of the holidays, but to actually bring more joy throughout the season. Instead of feeling trapped by the details of your budget, view it as a tool that gives you the freedom to spend without anxiety within the parameters of you have set for yourself.