It’s mid-December. You’ve finally finished your holiday shopping after researching and spending for two straight months. Just as you go to kick your feet up, you get that credit card statement, and reality sets in– you have vastly overspent.
You may wonder how. Before diving in, You made a 5-minute budget in September; how could this happen?
This tale is as old as time and has plagued individuals for years. But this year doesn’t have to be the same. See, sticking to your holiday budget is a critical inflection point when considering your entire budget. With the amount of preplanned and unplanned spending during this time, it’s more important than ever to create and follow a solid budget from the start.
Luckily, this article will focus on tips for ensuring that your holiday spending won’t get out of hand.
Why You Need a Budget Before Shopping
There is absolutely nothing worse than spending hours curating the perfect budget only to watch it disappear as soon as you swipe your credit card for the first time.
But you know what will make that hangover in January even worse? Not having that budget at all. Do not find yourself in a situation where you are guessing your spending budget because you tried to kick the can down the road.
Having a budget before you start shopping is essential to staying in control of your finances during the holiday season. It helps you set clear spending limits from the beginning, avoiding the stress of guessing or overspending when it’s too late to adjust.
Start With A Clear Budget
Now that we’ve established the importance of any budget, we can now get more serious. That budget you create needs to be thoughtful and will likely take some time to establish. And I don’t mean you must spend weeks or even days thinking about, although it would help.
No, you need to spend at least a few hours on this, and it should be in conjunction with your full daily budget. At this point, you won’t need details of what you want to buy and for whom. This stage is mainly about reviewing your budget and seeing how much money you can allocate to a sinking fund for that time of year without disrupting the macro budget.
I’m not saying you should not adjust your macro budget at all, but don’t let all rules and responsibilities go just because you want to be generous to friends and family. Remember, you have to still live in the new year and beyond.
Make A Gift List and Prioritize
With your newly allocated money, you now need to prioritize. It’s time to establish who is getting 15% of the budget to themselves and who’s being allocated 1%.
This task can also be daunting because you probably want to treat everyone because, holidays, but you need to recognize you have a budget and sticking to it is in your best interest for the other 10 months.
First, list everyone you plan to give a gift to. Once you have that list, prioritize the recipients. Then, look at the bottom of the list and decide if they should be gifted and, if they should, how you can save money on theirs.
Research And Plan
Now that you have a budget and know how much of the budget each person gets, we get to the dreadful, I mean, fun part.
Ideally, you’re at this step in early November at the latest.
This is where you source the gifts you will be providing and see what could potentially be purchased on Black Friday or Cyber Monday. It is also where you plan what has longer shipping times requiring early purchases and how many people will be relegated to gift cards.
Additionally, it’s when you look for coupons and cashback rewards. It’s the holiday season, so you know retailers will be fighting for your dollars. And whatever you do, please do not even consider any buy now, pay later options.
Shop Smart Using Technology
Before you start purchasing, you should ensure you have all your ducks in a row. Technology is your best friend in this stretch.
You can start by setting price alerts or notifications for items you are eyeballing. Tools like Honey and Google Shopping allow you to set up this lifesaver.
Next, you need a budgeting app. These will help you track your spending in real-time. Our personal favorite is BetterBudgets, which could probably expedite the earlier steps of this process and safely and securely simplify the middle and end of this year’s holiday cycle.
And please, please, please avoid impulse buying. Nothing is worse than looking at that statement in January, littered with emotional purchases.
DIY and Thoughtful Gift Alternatives
Look, at the end of the day, this is the season of giving. What’s important is not the price of the gift. It’s about spending time with the people you love.
Remember those people at the bottom of the list for whom you decided you still needed to get holiday gifts, but now your priorities have actually taken up more of the budget than expected? This is the time for your meaningful gifts to shine.
It doesn’t mean it has to be useless. If you have younger siblings or your sister has kids, you can gift free babysitting I-owe-you’s. This could also be the time you break out those hidden chef skills and provide three free dining coupons featuring Chef You.
Remember The Hidden Costs
There is more to the holidays than gift-giving. You need to factor in travel expenses if you’re going to see family.
You need to factor in Friendsgiving, work holiday parties, and any events that may take place. You even need to make sure you account for wrapping paper and tape or any holiday decor to get in the spirit.
This is why there is a big emphasis on the steps before you swipe. Everything is interdependent.
Reference Your Budget And Track Spending
Remember that you did all of this work for a reason. Please do not get all the way to the buying process and completely neglect to check back on your budget.
Check your budget daily, specifically right after every purchase. This way, you can readjust your budget for good or bad and immediately act accordingly. Learning how to constrain your budget could be beneficial for this process.
As the holiday season approaches, remember that mindful spending is critical to avoiding the dreaded financial stress accompanying this festive time of year. By sticking to a well-thought-out budget, you not only protect your financial well-being but also set yourself up for a happier and less stressful start to the new year. Planning ahead ensures that you can enjoy the holidays without the looming concern of overspending and its consequences.
Start today by using the tips provided in this guide to create your holiday budget. Whether it’s prioritizing your gift list, researching deals, or using technology to your advantage, every step you take now will pay off later. With a plan in place, you’ll be free to enjoy the true spirit of the holidays, knowing your finances are secure and no January hangover is coming.
