Look into the near future.
It’s early January, and you’re motivated to tackle your New Year’s resolutions. Paying off debts is an annual to-do, and there’s a good chance there will be a few other money-related resolutions on your list too, like save for a big goal.
Back to the present.
The holidays are fast approaching, and internal and external pressures to spend money are quickly piling on. Between presents, parties, decorations, and donations, it’s easy to get overwhelmed and spend, spend, spend without thought—especially when you’re spending money on others.
Almost three-quarters of Americans said they failed to properly budget for the holidays last year, according to a survey of 1,000 people conducted by Propeller Insights for Varo Money.
With the following tips, you can be in the quarter of people who are properly budgeting for the holiday season.
Focus on what’s most important first
Controlling your overall expenses doesn’t mean you have to constrain yourself all the time. Try to identify what’s at the top of your priority list this year, and then figure out what you have to spend on those things (without going into debt).
For some people, being able to spend the majority of their disposable income on what’s most important—getting a relative an extra nice present, making a large donation to charity—is the best part of budgeting. The trick is understanding what you need to trade off to make it work. For example, you have to cut back spending in areas that are less important to you or find ways to make extra money to cover the difference.
Stick to your budget without disappointing others
Finding a balance is important all year round, not just during the holidays. But others’ expectations and our expectations for ourselves can make managing money particularly tricky during the holidays.
Many holiday expenses, such as traveling to visit relatives or buying at least a few small presents, are more-or-less inevitable. You might have to bear some of these costs even if they’re not a top priority, and should try to include them in your spending plan:
- Know what you’re working with. Get realistic about how much money you’ll likely spend this year. Add up all your must-buy expenses, and check your budget or savings to see how much you can afford without going into debt. The difference between the two is your leftover holiday budget, which you can allocate based on your priorities. If you’re already behind, you may have to reevaluate what you consider a must-buy, look for other areas where you can cut back, or figure out how to make some extra money.
- Set expectations ahead of time. Let others know your plans ahead as early as possible, especially if you’re going to break from tradition when it comes to travel or gifts. This can help set the stage and avoid last-minute disappointment.
- Create rules for gifting. You’re not the only one that’s thinking about money during the holidays. If you have a large family or group of gift-giving friends, propose an arrangement that’ll help everyone save. You could set a cap (like $25) for how much everyone can spend on each present, or create a gift exchange, so each person only has to buy one gift.
Tips for saving money on presents
Even if gifts aren’t at the top of your list of priorities, you’ll likely need to buy some presents for family members, friends, and colleagues. Here are some tips for saving money on those inevitable expenses:
- Wait until the first few weeks of December to buy toys, that’s when they’re usually on sale.
- Be willing to check out clearance racks or thrift shops.
- Particularly for adults and friends, a sentimental yet inexpensive gift can be a good option. A framed photo, for example, may become a cherished keepsake for years to come.
- If you plan on giving gift cards, you can sometimes find deals for brand new gift cards that are 10-20% off. These are often available at grocery or office supply stores, and they occasionally pop up on Amazon and eBay as well. You can also compare prices for “used” gift cards on Gift Card Granny.
- Whether you’re shopping online or in stores, stack discounts, sales, cash-back offers, and discounted gift cards or a rewards credit card to minimize your total cost.
- If you can’t afford gifts for your children, try to sign up for local government or charitable organization’s gift drive. The Marine Corp. runs Toys for Tots, a national program.
- Spread out some of your expenses by gifting an experience that will take place later in the year.
Another savings tip—if you have money left in your budget after the holidays, stack up on decorations and other essentials while they’re on sale to avoid having to buy them next year.
Celebrating what you have
We can get bombarded with conflicting messages during the holiday season as commercialization faces off against “it’s the thought that counts.” It’s hard to focus on the later, particularly when others are expected you to follow through with the former.
Fortunately, something doesn’t have to cost a lot to be a wonderful gift. You can prioritize where and when you spend your money and share your intentions with others to help spread a holiday cheer.
Louis DeNicola is a freelance personal finance writer and credit enthusiast. You can find him on Twitter @is_lou.
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