For many of us, the holiday season is one of the most exciting and joyful times of the year, but it can also be stressful and financially draining. A 2019 survey from Bankrate.com found that “more than 6 out of 10 people feel pressure to overspend” on holiday-related expenses like gifts, social events, and donations. Read along for some budgeting tips to help you enjoy the holiday without breaking the bank.
Gifts aren’t the only thing you’ll spend money on this holiday season. Unfortunately, many of us make the mistake of only setting aside cash for presents when there are many other everyday expenses that, when not accounted for, can lead you to spend far more than initially anticipated. Thus, when planning this year’s holiday budget, consider additional expenses such as specialty goods and drinks, host/hostess gifts, holiday clothing, babysitters, and transportation (to name a few).
For example, if you plan on hosting a holiday dinner, ensure you have a budget set that accounts for the cost of food, table settings, drinks, and decor. An easy way to save money (and potentially a lot of stress) is to organize a potluck-style dinner. Instead of cooking and paying for an entire holiday dinner yourself, assign each guest a dish to bring and share amongst the group.
It’s heartwarming to watch a friend or family member’s eyes light up as they unwrap the perfect gift you put hours of thought and care into giving. It’s all but too easy to overspend on presents for loved ones. However, contrary to popular belief, you don’t have to burn a hole in your pocket and spend beyond your means to spread some holiday cheer.
A good starting point to ensure a realistic gift budget is to create a list of the family and friends you plan to give gifts to. Once you’ve established a list, assign a set sum to spend on each person, allocating more funds to those most important to you.
For instance, a general rule of thumb is to set aside about $100 to 200 for direct family members and close friends, sticking to a smaller budget of around $25-50 for distant relatives and co-workers. Based on your financial situation, feel free to adjust your budget to an amount that leaves you confident in your savings but happy with your purchases.
To better understand what the year’s holiday budget should look like, consider going through last year’s bank statements and receipts, and determine how much you spent on holiday expenses the previous year. Having insight into categories where you spent appropriately and areas where you might have overspent can allow you to evaluate better any spending patterns you need to assess or areas you can be more financially generous with.
Check out our previous blog post on Raising Financially Responsible Children. In addition, if you need personalized financial advice, our team is always here to help—contact us today to book an appointment!