Did you scope out the Black Friday and Cyber Monday deals? Don’t put a dollar amount on your appreciation for your loved ones this holiday season. A good predictor of how much you will spend is to look at your past credit card statements. Setting a spending limit is just the beginning of putting together a holiday budget. A budget also requires being diligent and having regular check-ins with yourself to ensure you are on track—that means you need to set a “giving goal” and stick to it!
When trying to build a holiday budget, it doesn’t only include buying gifts. Your budget also includes all of the travel, decorations, miscellaneous expenses, and the regular living expenses you have such as loan payments, tax payments, rent, food, credit card payments, insurance, etc.
So, how do you create one? First, make a list of everyone you plan on giving a gift to this year—that means from your immediate family members all the way to your children’s teachers or secretary (because you know they make your world go around!). Second, it’s easier said than done but try to decide what you want to buy for each person, then shop around to determine the general price. Third, add in all of your additional holiday expenses. For example, how much will it cost you to travel to see your loved ones? Also, remember the extra food you need for hosting, decorations, entertaining, or even postage for shipping. Fourth, total up all of the cost of gifts and your additional holiday expenses. Fifth, compare your added total to the amount of cash/savings you have and are willing to spend. Then, see where you can cut back as needed.
Remember, the earlier you start shopping for the holidays, the less likely you will be to rely on credit cards because you have more time to plan, and more paychecks coming in. If you are someone that hates opening up your credit card statement, or when the email comes into your inbox…it’s not checked until the last minute—a good idea may be to start thinking about a budget (not only just for the holidays!). There are a lot of useful tools and budgeting systems that can be used. In addition, understanding how to track your interest, minimum payments and due dates is the smartest way to tackle those balances.