How To Build (And Stick To) A Holiday Budget

From buying gifts to financing family get-togethers and bankrolling your holiday decor addiction, it’s often a slippery slope when it comes to holiday expenses. The holiday season only comes around once a year, so it’s understandable that you want to make the most of it – but it’s not worth draining your savings to do so.

Contrary to popular belief, it’s more than possible to enjoy the holidays on a budget when you plan ahead. In this article, we’ll share the crucial steps involved in creating a holiday budget and our tips on how to stick to it.

According to USAToday, the average American spends upward of $1,000 on holiday expenses, with the average spend increasing consistently year-over-year. And as your needs change, so does your budget – let’s take a look at how you can effectively prepare for your holiday expenses.

Make A List of Known Expenses

To build your budget, you need to acknowledge and understand each category in which you’ll be spending, so start by making a list of all the things you need to save for.

Be sure to consider big and small expenses – including gifts, food, decorations, cards and wrapping, holiday activities, travel and charitable giving – and write them down.

Determine Your Priorities

So you understand what your expenses are, but which categories are most important to you and your family? Consider your priorities as well as the timeline you’re working with.

For example, you’ll probably want to buy your holiday decor sooner than your gifts to make the most of the season; however, for most people, gifts are probably a bigger expense and higher priority than home decor. Using your list of expenses, prioritize which items you can compromise on and which you cannot.

Allocate Funds

Now that your priorities are set, it’s time to think numbers. Start by determining how much you can afford to spend overall, then allocate those funds to each expense category, starting with your top priorities. If you aren’t sure how much you typically spend in a holiday season, look into the previous’ years bank and credit card statements for a starting point.

As you allocate funds, consider the intricacies of each category. How many people do you need to buy gifts for? How much do you typically spend per person? Be sure to include buffer in your budget for unexpected expenses. If your coworkers decide on a last-minute Secret Santa gift exchange, you don’t want to break your entire budget to participate.

Make Adjustments

Do you need to make sacrifices in one area to prioritize another? As important as it is to have a plan – and to stick to it – it’s also important to be adaptable as needed. If you notice yourself spending more than expected in one category, think about where you can adjust in the others.

If you’re worried about having the money you need, consider some alternative ways to raise funds such as selling unwanted items, filling out online surveys or picking up a side hustle.

Track Purchases

Perhaps the most important part of any successful budget happens after the budget has been created. As you begin making purchases, keep track of how much you’re spending in each category and how it aligns with your plans. If you find yourself going above budget in one area, take a step back and consider how to get back on track.

Creating a budget is one thing, but following it is another. If you tend to overspend, the following tips will help you stick to your holiday budget.

Try The Cash-Only System

What’s the better option, cash or credit? There’s nothing wrong with using a credit card – after all, using one responsibly can help to improve your credit score. But it’s much easier to get carried away with your spending when all you have to do is swipe a card. Consider trying the cash-only system instead to help you keep track of how much you’ve spent and how much you have left in your wallet.

Take Advantage of Sales

Shopping strategically can make a big difference, so make the most of seasonal sales and promotions like Black Friday and Cyber Monday to find the best deals.

Compare Prices Online

It might be convenient to buy all your holiday gifts in one place, but if you’re looking for ways to save, taking the time to compare prices between retailers can make a significant difference. There are several price-comparison apps available, so before you buy that gift, double check that you can’t buy it for less elsewhere.

Do-It-Yourself

DIY is popular for a reason! If you’re crafty, consider making your gifts instead of buying them. In addition to being more affordable, handmade gifts can be customized for the recipient and they are often more personal than something you ordered online.

You may even be able to make some of your own holiday décor!

Embrace Free Activities

There’s no doubt this time of year is expensive – but there are plenty of free and nearly free activities you can embrace to enjoy the holiday season without breaking the bank. It costs you nothing to go sledding, watch holiday movies and visit Santa at the mall, so look up affordable holiday events and activities in your area and incorporate them into your annual traditions.

Switch To A Potluck

If the pressure of hosting your annual Friendsgiving is too much, try switching to a potluck where each person brings a dish. In addition to cutting your costs, organizing a potluck for your get together will significantly decrease the amount of planning and preparation you need to do as the host.

Find A Side Hustle

If you need to make some extra cash, you have several avenues to consider, from freelance work to temporary holiday jobs. While this may not work for everyone, it’s a great option for people with flexible schedules. And if your day job already occupies most of your valuable time, there are still ways to make cash at home with a side hustle.

Start Saving Sooner

Hindsight is 20/20, so if you’re struggling to afford your holiday expenses, you may wish you would have started saving sooner. If you find yourself in a less than ideal financial situation during the holidays, learn from your mistakes. As the New Year begins, commit to saving a little bit each month so you won’t be overwhelmed when the holidays roll around again.

If you find yourself feeling stressed about holiday expenses, you’re not alone. It may be the most wonderful time of the year, but it’s also the most expensive.

The good news? With the right preparation, you can save valuable time and money so you can enjoy the holiday season without the headache.

Looking for budgeting tips beyond the holidays? Check out the definitive guide to creating a budget that works!