Holiday budgeting is an essential part of your year end personal finances.

Why Do You Need a Holiday Budget?

First of all, why do you need a holiday budget? Well, a holiday budget can help you avoid overspending, debt, and financial regrets. It can also help you prioritize your needs and wants, and allocate your money wisely. A holiday budget can also give you peace of mind and confidence that you can afford the things that matter most to you during this special time of the year. Having a solid plan can help you get over potential financial frustrations post holidays.

How Can You Create a Holiday Budget?

The fundamentals to creating a holiday budget is the same as creating any other budget. Having a separate plan for the holidays can help you avoid any hidden expenses or you having to eat into your main household budget. Here are some steps to follow:

1. Set your overall spending limit.

This is the total amount of money that you can afford to spend on the holidays, without going into debt or dipping into your savings. You can base this on your income, expenses, and savings goals. Be realistic and honest with yourself about what you can comfortably spend.

2. Make a list of all your holiday expenses.

This includes gifts, travel, food, decorations, entertainment, donations, and anything else that you plan to spend money on during the holidays. Don’t forget to include taxes, shipping fees, tips, and other hidden costs. Be as through and realistic as you can to avoid any surprises along the way.

3. Assign a budget for each expense category.

Divide your overall spending limit by the number of categories that you have, and allocate a specific amount for each one. For example, if your spending limit is $1,000 and you have five categories, you can assign $200 for each category. You can also adjust the amounts based on your preferences and priorities. For example, if you value travel more than gifts, you can allocate more money for travel and less for gifts.

4. Track your spending and stick to your budget.

As you shop and spend money on the holidays, keep track of how much you spend and how much you have left in each category. You can use a spreadsheet, an app such as CreditU, or a simple notebook to record your transactions. Try to stay within your budget and avoid impulse purchases or unnecessary expenses. If you go over budget in one category, try to cut back in another category to balance it out.

5. Review your budget and make adjustments as needed.

At the end of the holidays, review your budget and see how well you did. Did you stay within your spending limit? Did you overspend or underspend in any category? How did you feel about your spending decisions? What worked well and what didn’t? Use this information to improve your budgeting skills and plan better for next year.

FAQ: Holiday Budgeting

These last-minute gift ideas bring joy – instead of debt!

Framed Family Photos

Getting photos printed at Walgreens or CVS only costs a few cents, and getting a cute picture frame off of Amazon doesn’t have to be expensive. This gift is great for parents or grandparents, especially since you probably haven’t gotten to see them this year due to COVID. It’s thoughtful, affordable, and easy to get last minute. What’s not to like?

Baked Goods

If you love making cookies, brownies, pies, or any other baked goods, these can be great last-minute gift ideas for friends and family! Plus, you probably already have most of the main ingredients you need, so you won’t have to spend much money (which is perfect if you’re working on debt management). You could always buy some red and green sprinkles or holiday-themed paper plates/trays to put them on, but other than that, this won’t cost anything.

Subscriptions

There are tons of different subscriptions you could get as a last-minute gift for a friend or family member. Netflix, Hulu, Amazon Prime, Book of the Month, or any magazine/newspaper they like vary in price. For most of the aforementioned examples, you can give a gift of a three-month subscription for $50 or less.

DIY Hot Chocolate Mix

Fill a mason jar with cocoa mix, chocolate chips, and marshmallows for a DIY hot chocolate mix. Bonus points for adding fun extras like candy canes or cinnamon sticks! You can decorate the outside of the jar with ribbon or other craft materials to give it a holiday feel.

“Experience” Gifts

We’re all looking forward to the end of the pandemic when we can finally get out and do fun things! Support local businesses by giving your friends and family “experience” gifts, like a pass to an aquarium or museum that they can use when everything is open again. Other ideas that fall into this category include a gift certificates to local restaurants, movie theaters, or a wine & paint night.

Final Tips on Last-Minute Gift Ideas

Holiday gifts don’t have to result in credit card debt – even if you procrastinated and waited until the last minute. Hopefully these cheap last-minute gift ideas can help you get the remainder of your holiday shopping done! Remember to stick to your budget and don’t feel pressured to spend more than you can really afford.

If you struggle to pay off debt, ACCC can help. Schedule a free credit counseling session today.