How to Make a Budget for Your Holiday Shopping This Year
The holidays are a time of joy, light, and celebrations when families and friends gather from near and far to spend time together. The season is certainly a special time of year. Yet all the celebrations, the travel, the entertaining, the gift giving, and the food and drink that is associated with the festive season comes at a sometimes hefty price tag.
No matter where you’re from or what you do, the holiday season can certainly leave a dent in your wallet. In fact, research has shown that the average person adds almost $1,000 in holiday debt to their overall debt each year. These days the holiday spending period seems to grow longer with each new year, with festive shopping and decorating beginning before Halloween is even a distant memory. For some, the thought of the upcoming holiday season can bring stress and worry rather than happiness and excitement.
Though weathering the holiday spending spree and staying sane doesn’t have to be an impossible task. Taking some time out now to plan and learn how to make a budget can save you money, worry, and time as the season approaches, freeing you up to fully enjoy the best parts of the holiday time with those you love. The more you do before the madness kicks in, the better off you’ll be. In fact, a few simple but important steps can guide you on how to make a budget for all your festive needs and wants.
Understand Your Capabilities
The first step in creating a workable budget for your holiday shopping is to understand exactly where you’re at with your personal finances. This isn’t necessarily a fun task, but it’s an important one to inform how much you can spend on all your gifts and personal needs.
Start by looking at your own debt, especially credit cards. If you have more credit cards than you can pay off, then you may need to adjust what you plan to spend this year. Examine your monthly income and outgoing expenses. With your current budget, what will you have left remaining at the end of the month? This will be your disposable income that you can then direct towards holiday gifts.
Some people may find it useful to start setting aside small amounts in January for the holiday season to come at the end of the year. If you’re not that on the ball then start now and figure out what you can cut out for a few months so that you can have a larger sum set aside by the time the festive season rolls around.
You can build in more flexibility into your budget by reducing the amount of expensive gifts you may be planning on buying to cheaper presents or handmade items. You can still treat your loved ones to heartfelt gifts, or experience-based gifts such as cleaning their house or organizing a night in, that don’t break the bank.
Forecast For Your Income
Next, in learning how to make a budget, it’s time to estimate how much money you expect to earn over the festive season (from about November to January). Examining your pay stubs and bank account information from last year is helpful in determining where you’ll be this year. Just average out the amount of money you’ve earned over the last two months then multiply it by two to figure out what you can expect to have for the holiday period.
Determine Your Budget
Once you’ve set your forecast you can then begin to calculate your basic budget. This begins with your expenses. In order to determine what you can spend on your holiday shopping, you need to create a budget for all your necessary living expenses such as rent, insurance, groceries, gas, utilities, and other expenses. Then multiply this budget by two to understand your basic expenses.
Once you have your projected income and your basic budget with expenses prepared you will then be able to understand how much you can spend on gifts, celebrations, travel, and other holiday needs. To arrive at this number then subtract your budget from your intended income. To narrow this down even more into what you can spend on gifts, just subtract what money you project to spend on travel, party outfits, and other items from your holiday spending funds.
Organize Your Gift Lists
With your spending budget set aside it’s then time to allocate where exactly that money will go by organizing your gift lists. It may be helpful to develop a budgeting worksheet or a list where you outline a gift budget for everyone on your list.
Start by writing down everyone that you need to buy a present for, from your parents to friends, to aunts and uncles, to coworkers. Decide how much you want to spend on each person on your list and assign them a dollar amount. This will help you stay organized, ensure that you remember everyone on your list, and stay in budget. Brainstorm gifts that you can get or give to each one that are either equal to or below what you’ve outlined for them and write a few options on your list.
Start To Shop Around
Research is often the key to smart holiday shopping within budget. If you have multiple gift options in mind for everyone on your list then you can start by tracking where the best deals are to purchase them. You can be at an advantage to get the best price by checking different stores, online shopping, or using price comparison tools.
As the early bird most often definitely gets the worm, you can also take advantage of Black Friday, Cyber Monday and other holiday sales to get the best deal on your desired present.
Stick To Your Budget
It’s tempting to overindulge during the festive period when everyone seems jolly, but learning how to make a budget and sticking to that budget will help you come out of the season without a mountain of debt. Some people may find it easier to adhere to their budget by withdrawing the money they intend to spend on gifts in cash so that they can keep more of a visual track on it and not be tempted to overspend if they were using credit or debit cards instead. If you’ve bought presents online, be sure to deduct this from the cash you withdrew and use it to deposit back into your account later. If you’ve been extra vigilant with your budget you’ll hopefully have this extra to spend later.
With a little careful planning and organizing, following these steps ensures that you stay on track throughout the holiday season and that you and your loved ones are fully able to enjoy and experience all the joys and excitement that this time brings.
Related: Make a Monthly Budget that Works for Your Family
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