It’s that time of year, and you probably intend to spend as much time as you can enjoying the holidays with your friends and family, not worrying about how you’re going to manage your holiday debt as the new year begins. This year, make that intention a reality. Enjoy the holidays more fully by budgeting and managing holiday expenses. You’ll find that you feel more in control, less stressed and more prepared for the coming year.
You’re not alone in your desire to save money during the holiday season. Our financial advisors can offer help with managing your finances year round, including during the financially demanding holidays. The following 5 tips can help you to budget your holiday expenses and set yourself up for a financially savvy start to the new year.
1. Evaluate Your Current Financial Situation
Before you can make a budget, you’ll need to examine your current financial situation. Answering the following questions can help you to get a good picture of what you’re working with:
How much do you have in your checking and savings accounts?
What do you owe on your credit cards and charge cards?
How much do you hope to have in your checking and savings accounts at the start of the new year?
Based on your answers to these questions, you’re armed with the information you need to create a budget.
2. Create a Budget for Holiday Expenses
With a target figure for how much you can safely spend during the holidays, you can now work on your budget. One common mistake people make during the holidays is to only consider how much they’re going to spend on gifts and to forget about other holiday expenses. Yes, it’s important to budget for spending on gifts, but you probably also spend money on some of the following items:
Christmas cards and shipping
Eating out
Decorations for your home
Travel
Hosting dinners or parties
Smaller gifts for teachers and neighbors
Assign budgeted amounts to each of these categories, making sure that your total (including the amount you plan to spend on gifts) doesn’t exceed your targeted figure for how much you can safely spend during the holidays.
3. Consider Using Cash
If you’ve had problems with overspending in the past, consider using a cash system during the holidays. Withdraw the total amount of cash you need for your holiday expenses from your checking or savings account, and divvy up the cash into envelopes for your different holiday spending categories: gifts, entertaining, travel, decorations, etc.
Although most people know in their heads that their money is limited, sometimes that thought flies out the window in the midst of holiday shopping and celebrations. Using a cash system constantly reminds you that there is an end to the money in each envelope, and it helps you to think of ways to stretch your budgeted money farther.
4. Be Creative
With your cash envelopes in hand, you’re ready to tackle the holidays responsibly, but don’t feel that you have to compromise all of your expectations in order to stay within your budget. If you won’t be able to spend as much as you have in the past, don’t worry. This can be an opportunity instead of a trial. You may find that you enjoy the holidays more when you’re less focused on consumption. Here are some ways you can be creative in your efforts to stay within your holiday budget:
Being creative can help you to enjoy the holidays within your budget, especially if you’ve never tried to limit your holiday expenses before.
Give homemade gifts, baked goods, or service coupons
Invite neighbors over for a potluck gathering
Reduce shipping costs by mailing gift cards or using online retailers with free shipping
Send e-cards instead of traditional holiday cards
Plan ahead for travel to get the best deals
5. Start Early for Next Year’s Holidays
Waiting until the last minute to consider holiday expenses leaves you with fewer options, but you can always plan better for next year. If you decide in January how much you’d like to spend on the next year’s holidays, you can save regularly and relatively painlessly.
For example, if you think you’ll need $1,200 to handle next year’s holiday season, start socking away $100 per month at the beginning of the year. You can set up an automatic transfer between your checking and savings account and at the end of the year, you’ll have the money you need to cover your holiday spending. We can help you set up an automatic, recurring transfer to help you with your holiday savings plan.
Don’t let the holidays sabotage your financial health. Speak with one of our Branch Sales Managers at Florida Capital Bank about how you can make it through the holiday season without jeopardizing your financial well-being in the coming months. Enjoy the holidays, and set yourself up for a financially healthy new year.