The holiday season is a time for gatherings and gifts, which sometimes come with a hefty price tag. According to the National Retail Federation, the average person spends about $800 on their holiday shopping.
Chris Tarsha, with the ProMedica Federal Credit Union, says that keeping a budget during the holiday season can prevent post holiday debts and financial issues. “Holiday money must come from your current disposable income,” he advises. That means, you shouldn’t be using loans or dipping into emergency savings to get through the holidays.
If you can save ahead of time for the season, that’s even better. For instance, the ProMedica Federal Credit Union has a Holiday Savings Account that you can use to save throughout the year. Tarsha says you can allocate funds to the account via direct deposit and start using the funds at the beginning of the fourth quarter to start your budgeted holiday spend. Whether you use an account like this, or another means, saving throughout the year can help alleviate the pressure for funds at the end of the year.
Do your research
With some research, you can make the most of your holiday budget. Tarsha suggests comparing in-store and online prices and searching for options that allow free shipping if buying online. And, shop early. “Last minute, emergency trips to the mall or supermarket often derail your budget, so plan ahead,” he says. Resources like a spreadsheet, online budget tools and even a paper and pencil can be helpful in keeping track of your spending.
While gifts may be the bulk of your holiday spending, don’t forget the other costs that contribute to your holiday budget. “Wrapping paper, holiday cards, postage, travel and meals,” says Tarsha. “Create a list of everyone you intend to buy for and decide who is getting. Set firm prices for each person.”
Stick to it
The hardest part of the holiday budget is sticking to it. “People struggle following a budget because it sounds restrictive,” explains Tarsha. “Budgeting is spending with a purpose. This takes discipline. We are constantly bombarded by clever advertising and holiday sales that jump start our emotions. Most purchase decisions are made with emotions and the budget is made with logic.”
If you absolutely must spend money outside of your disposable income, make sure you have a plan to pay off the money you’ve spent once the new year arrives.