It’s easy to go overboard with spending any time of year, but especially during the holidays. Creating a budget seems fairly simple, but between gift-buying, holiday parties, travel, charity donations, and unforeseen expenses, sticking to it may seem like Mission Impossible. Here are some tips so you can escape this holiday season with your savings intact.
There are four phases to a successful holiday budget: planning, saving, spending, and monitoring. Below are some key steps you can take to navigate your way through these phases.
You can’t plan your holiday bankroll without knowing what portion of your income is earmarked for other expenses. Monthly bills are easy to remember, but don’t forget less frequent charges, like subscriptions, charity donations, and other payments you may make in lump sums. Streamline this process by categorizing your spending areas into housing, utilities, transportation, food, child care, health care, entertainment, debt, and insurance.
Connect the Dots
Once you’ve identified your existing expenses, it’s time to determine how much you have left. First, establish how much will be in your holiday coffers. Then, determine how much you can spend for each person on your list, as well as the amount you will put toward decorations, greeting cards, entertainment, and travel. Bonus tip: online shopping can be extremely convenient, but be sure to account for shipping charges. Keep an eye out for free shipping offers!
Save Your Money…From Yourself
Once you know what portion of your income to put aside for your holiday spending, place it into a separate account, such as NVE Bank’s Universal Club. Although it may be tempting, don’t touch it until you’re ready to buy something on your list. Take it a step further by setting up scheduled transfers to that account based on your estimated holiday spending.
Shopping Lists Are Your Friend
If you didn’t know how to make a decent list before reading this blog, you will now! Create a table with the following columns:
- Name of recipient
- One or more gift ideas for that person
- Estimated cost of each gift (based on research)
- Spending limit per person
- Actual amount spent
Add up all the estimated costs and make sure the total is the same as, or less than the gift portion of your budget. Bring the list when you go shopping, and stick to it!
Embrace Your Inner Accountant
Keeping track of your spending is fundamental to successfully managing your budget. Use whatever method works best for you, whether it’s an Excel spreadsheet, smart phone app, or trusty notebook. This will keep you informed of your fund status, and allow you to shift your spending plan as needed.
Here’s a scenario where this method pays off: you planned to spend $65 on a bracelet for your sister, but then found it on sale for $40. Instead of forgetting about that $25 savings, you can shift it to someone else on your list.
Staying organized the key to success when it comes to budgeting. By utilizing these tips, you are well on your way to a successful and happy holiday season.
In our next post, we’ll share some other helpful tips and tricks. Until then, happy shopping!