Holiday Budget Series -1
Article 1- The Budget
Holidays are expensive. It’s easy for spending to get out of hand at the holidays. Travel, gifts, meals, can add up quickly. How can you keep your holiday spending in check and not wake up with a holiday financial hangover in January?
Over the next few articles. We will feature a series of steps and ideas to help you win the holiday spending battle. We’ll follow a sort of timeline as we move into and through the holidays
1. Holiday Budget - Have a Budget and Stick to It
It’s November 1st. You start thinking about the holidays coming up, you can not have a repeat of last year with $1,500 on your credit card in January. How do we keep holiday spending under control this year and still bring joy to our family and loved ones.
The first step to following any plan is to have one. Take a look at your finances and determine what you can spend on the holidays before you buy your first gift, or hang your first decoration.
1. Write down your spending categories. We’ll use the following main 4.
2. Set a total holiday budget. Based on your finances, physically write down, don’t just pick an approximate number in your head. Write down the number. We will not spend more than this on Christmas. Why aren’t number 1 and two reversed? It’s logical to start with your budget number, but until you’ve given some thought to what all you will be spending on. It’s hard to know how much you will need
3. Once you have a budget number, allocate your spending. Assign your budget to each of your spending categories. Set your gift budget last. Once you have covered the events you know will take place. family meal, travel to grandma’s etc… You won’t have to guess at how much to spend on gifts. What is left over after you have covered your plans is your gift budget. The average American as of 2019 spends around $1,000 dollars at Christmas.
4. Have a contingency budget. saying I’m going to decide every penny I spend on the holidays in October sounds great, and rarely happens. So prepare for that. We recommend %10 as a good rule of thumb. Understand the contingency budget is not what you expect to spend. It’s for unforeseeable that come up during the holiday season. Your goal is not to use it, but it’s there if you need it. P.S. getting Billy that 3rd game instead of just the 2 because he’s been so good this year? Not an unforeseeable. Unforeseeable is Aunt June forgot to order the pecan pie someone needs to run to the grocery store and pick one up 30 minutes before dinner.
- Travel – To Grandmas 5 days – $150 dollars
- Gas – $75
- Food for travel – $50
- House gift for hosting $25
- Food – $150
- Holiday Meal – Bringing the turkey and two dishes -$60
- Christmas treats – $10
- Unexpected – $40
- Office party buy in – $40
- Decorations – $100
- New lights for roof – $45
- Christmas Tree ornaments – $20
- Ornaments around the house – $35
- Total Before Gifts – $400
Gift Budget $1000-$400 = $600
- Contingency Budget $100 unused
Just like that you know exactly how much you have to spend on gifts. You can shop without guilt or worry that you are overspending.
We’ve set your budget for the holidays. In our next article we’ll focus on ways to make extra holiday cash and help meet that budget we’ve set.