Holiday Budgeting Tips: How To Do It Right – Budgeting is an integral aspect of the holidays. This is because the period is usually characterized by a lot of expenses; sometimes, larger than other times of the year. This, therefore, explains the importance of Holiday budgeting.
Adequate budgeting is a financial skill that is expected of everyone. But understanding holiday budgeting is a hack to surviving the financial drought that some people experience after the holidays.
A lot of people have had to battle depression after throwing all caution to the wind during the holidays as they got carried away with expenses- both the important and not so important.
There is a popular saying that “he who fails to plan, plans to fail”. Budgeting for your holiday expenses, therefore, is an important aspect of planning not to fail.
What is Holiday Budgeting?
Wikipedia defines budgeting as “a financial plan for a defined period”. Similarly, MoneyCounts calls it “a plan to spend your money”. It added that “Good budgeting is spending less than you are earning as you plan for your financial goals”.
Budgeting is the documentation of your proposed expenses in relation to your income. It is a strategic plan that you set out to execute your expenses from your income or savings. One thing is common about budgeting though; it is a plan to spend as little amount as possible to get as much value as possible.
Therefore, holiday budgeting is the plan you make to finance your expenses during the holidays like Christmas, Thanksgiving, Easter, Halloween, amongst others.
It is typical of holiday budgeting to cover expenses like food, drinks, clothing/costumes, decorations, presents for loved ones, vacations, sightseeing amongst others.
Where a functional budget is not prepared and adequately worked with, such an individual risk falling into financial crises after the holiday. This arguably explains why a lot of people complain about their finances in the new year- a period that follows a major holiday celebration; Christmas.
The 50-20-30 Holiday Budgeting rule
We cannot talk about adequate budgeting without mentioning the 50-20-30 budget rule. Of all forms of budgeting, this rule should be specially applied to your holiday budgeting.
The rule of thumb is an effective money management technique that suggests that while budgeting, 50% of your income or savings should be dedicated to essentials, savings to take 20%, while 30% goes for everything else.
Yes, it is still advisable to save even while you budget for the holidays. The holiday will come and go, expenses won’t.
The 50% meant for essentials covers rent, groceries, gas etc. The 20% dedicated to savings can sit pretty in your savings account, retirement account, loan account, and others. While 30% is allocated for non-essentials like clothing, gym membership, online streaming contribution etc.
It is always best to have your holiday’s expenses covered by the 30%. And where it is not enough, a little sacrifice may be made from your essentials and savings budget.
How to do Holiday Budgeting right?
There are several proven tips to help you budget adequately for your holidays, have fun, do the needful and not be under pressure in the process. With the following tips, your finance is safe before, during and after the holidays;
Tip #1: Set a Holiday Budget.
You can only do a holiday budget rightly when one exists. The first step to rightly budget is to create one. A non-existent budget cannot be accessed for correctness or not.
While you set a budget, you brainstorm and decide what items you believe are worthy of making it into the budget.
For example, you cannot verbally/mentally decide that you want to limit your holiday’s expenses to $100 and believe that settles it. You need to take a step further and itemize your expenses within the $100 target.
This is when you write down the expenses in the order of their importance and be disciplined enough to maintain the target when you start shopping. Although, it is also advisable to leave room for some little changes in the prices of items.
Tip #2: Note down who you’ll be getting presents for.
While it is nice to get presents for people, another holiday budgeting hack is to have them identified before the time. This will ensure you get the exact number of presents needed without having excess that you may not need.
When you decide on what present you want to give to your family members, friends, colleagues, acquaintances. it will be nice to write down their names and who gets what.
Even Santa does not gift everyone presents (smiley)
Tip #3: Shop early.
Over the years, Black-Friday deals have gained popularity across the globe. They are deals at supposed discount prices for customers. They start about a month before the Christmas celebrations (end of November) to allow people to shop at cheaper rates for the holiday.
Nevertheless, there has been clamor that the deals aren’t really cheap as compared to other times of the year.
Shoppers may therefore want to consider shopping for the holidays early enough before other people start. This also gives you ample time to compare prices, seek alternatives, and get the best pocket-friendly deals for you.
Tip #4: if you can, make the presents.
Another way to have a pocket-friendly holiday is to substitute the buying of presents for making them- if you can.
Some people tend to appreciate hand-made items and believe that they are thoughtful gestures. Therefore, if the majority of the people you intend to gift presents are more likely to appreciate hand-made items, you may opt for that overbuying. This will also cost you less.
Where the beneficiaries on your list have mixed preferences, you may decide on hand-made products for some, while others get bought products. Remember, the idea is to get as much value as possible for the lowest cost possible.
Tip #5: Shop with cash instead of credit cards.
It is easier to track your spending when you pay with cash instead of credit cards. Every time you bring out cash from your purse/wallet to pay for an item, you subconsciously notice that the money you went out with is reducing. You may not be able to notice this if you pay with your credit card.
As against paying with cash, when you shop with your card, you may get carried away with the swiping of the card and before you know it, a budgeted shopping may become a shopping spree- which may harm your account.
Tip #6: Pay attention to Shipping.
The increasing popularity and accessibility of the internet have contributed to the growth of e-commerce worldwide. This has also made the shipment of products become more normal than before. Although it usually comes at a price.
While shopping, pay attention to the terms and conditions that affect the shipment of products. Ensure that it is clear enough, and not that you are committing yourself to hidden charges. If you can, pick up your items by yourself. This is cheaper for you.
Some stores may offer you free shipment. Be certain that it is free indeed, and not deducted in any form- especially from the product price.
Tip #7: Save up for expensive gifts.
Some people are dear to our hearts and deserve the best present we can gift to them. If you have such category of people that you cannot just gift them just anything, or your choice of present for them is expensive, you may save up for them.
You can achieve this by saving up for such expensive presents early enough in a way that you do not feel the expense in your account when you eventually shop for them.
That way, you are gifting those special people presents that you believe that they deserve, without putting yourself in a financially tight corner.
Tip #8: Don’t wait until the last minute to shop.
Last minute shopping for your holidays is a no-no if you want your holiday budgeting to be effective. This is because the retailer understands that you are desperate at the moment and would have little or no choice but buy at the price given to you.
Aside from shopping at expensive rates, you are likely to burn out easily due to the last-minute rush, and may not get the best product(s) you need.
Shopping earlier allows you to adequately weigh your options and settle for the best.
Tip #9: Get a budget buddy.
You may also call them your accountability buddy or partner. They help you stay on track and not get carried away with the frenzy of the market.
Your budget buddy or accountability partner can either be a professional in finance, family member or friend. They ensure you make sound financial decisions as well as track your spending.
So, whenever you are not sure about a purchase, holla at your budget buddy for objective advice. As I like to phrase it, ‘budget buddy to the rescue!’
Tip #10: Assess the previous year’s holiday spending.
A great way to handle your holiday budget adequately is to assess the spending of the previous year’s holiday.
That way, you can identify the error in the previous year’s budget, and ensure you do not repeat it. You also know what you could have done better in the previous holiday and failed to do. Then you know the necessary upgrade to include in the current year’s budget.
This tip saves you the shock that ignorance may present to you while budgeting for your holiday.
Tip #11: Pay attention to the terms of ‘buy now, pay later options.
This could be another trap that shoppers ignorantly enter willingly. When the retailer offers you the ‘buy now, pay later or the ‘pay installment’ option, do well to get and understand the clear and concise terms. This is important to ensure you don’t sign yourself into unnecessary indebtedness.
Offers as such may be attractive and sound juicy, but without proper understanding, it may be the exact opposite of the actual situation. You cannot be too careful.