How to Create a Holiday Budget

 

Holiday budget

Holiday budget | tortoon/iStock / Getty Images Plus

Shopping during the holidays is so much easier when you actually have money to make purchases. Putting everything on your credit card catches up to you after a while. That’s where a holiday budget comes in. Creating—and sticking to—a budget will help you remain financially healthy and save you from a world of heartache once the holidays are over. Here’s how to create a holiday budget.

Start early

Resist the urge to throw a budget together at the last minute. Begin budgeting for holiday gifts well in advance. Scrambling for holiday cash a few days before Christmas could wreck your finances. A little planning can go a long way.

Set a dollar amount

How much money will you need for gifts? Don’t decide how much you’re going to spend once you get to the store. It’s best to determine how much you can afford before you start shopping. This way, you won’t give in to impulse purchases. Figure out what you want to buy for each person on your list, how much the item will cost, and which store you plan to visit for your purchase.

Be realistic

It will be difficult to stay on track with spending if you don’t have a realistic budget. Make sure the dollar amount you set isn’t too strict. However, you should also make sure you haven’t given yourself too much room to overspend. If you think you’ll have to dip into savings or that you’ll have a hard time paying off credit card debt at the end of the month, you need to rethink your budget.

Set up a holiday fund

a glass see through piggy bank full of coins

Piggy bank | Source: iStock

Establish a savings account just for gifts. Put a set amount of money into the fund each week or each pay day. Saving small amounts over a period of time will make it easier to come up with the cash for your shopping trip.

Cut back on spending

Make an effort to cut back on something you regularly spend money on, so you’ll have extra cash for holiday gifts. Perhaps you can get cheaper haircuts or give up a manicure or two. Pick that something extra you like to spend on and cut back—or cut it out entirely—and redirect that money toward your gift budget. If you don’t want to give up your indulgence, find ways to add cash to your budget by selling a few personal items or getting a side hustle.

Take advantage of sales

You’ll save even more money if you don’t pay full price. Black Friday and Cyber Monday are great times to stock up on holiday gifts. Also, be on the lookout for coupon codes. You can find the best deals by searching deal and coupon websites. Sign up for their newsletters so you can get alerts about upcoming sales.

Consider trimming down your shopping list

If you find there simply isn’t enough money to do your shopping, you’ll have some tough choices to make. Do you really need to buy gifts for everyone on your list? Review your gift list and aim to remove people until you can get down to a manageable spending amount.

Read more: How to Save Money on Groceries During the Holidays

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