How To Make a Holiday Budget (That You Can Stick To)

All over the world, the holiday season is a time for celebration and spending time with loved ones. But it can also be a time of overspending and financial stress, leading to debt, regrets, and frustration after the holidays.

But it doesn’t have to be that way. Creating a holiday budget and sticking to it helps you to enjoy the holiday season without going beyond your means. Here are steps for creating a holiday budget and how to stick to it.

4 Simple Steps To Creating a Holiday Budget

1. Set a Holiday Spending Limit

The first step to creating a holiday budget is setting a spending limit for yourself. Determine how much you can afford to spend on gifts, holiday meals, and other holiday expenses without overspending.

Anything that exceeds this limit should be cut from your holiday spending plan. If you have a hard time setting and sticking to a limit, consider consulting with a financial advisor or using budgeting apps to help keep track of your spending.

It also helps to bring your spouse along if you’re married and involve the children in the budgeting process. This way, everyone is on the same page and committed to sticking to the budget.

2. Create a List of Holiday Expenses

This step could also be the first thing to do in budgeting. Write down all the expenses you anticipate having during the holidays, including gifts, holiday meals, travel expenses, and any other holiday-related expenses.

This list will help you determine your spending limit and prioritize which expenses are most important to you. It also helps to keep track of your expenses as they occur and ensure you’re staying within your budget.

You should also be thorough with your list and capture all potential expenses, even small ones like stocking stuffers or holiday cards. These expenses can add up quickly and throw off your budget if you don’t account for them.

3. Prioritize Spending and Allocate Funds

Every item on your holiday expense list may not be equally important to you, and that’s a good thing. Go through your list, prioritize the most important to you, and allocate most of your holiday budget toward those expenses.

For example, if gifting for your immediate family is a priority, allocate more funds towards their gifts than buying holiday decorations or hosting a holiday party. Or, if you’re traveling to see loved ones, spend more of your budget on travel expenses.

The idea is to focus on what matters most to you during the holidays and not overspend on things that aren’t as important.

4. Track All Expenses

Now that you have a budget, it’s time to make it work for you. The best way to do this is by keeping track of all your holiday expenses. Tracking expenses allows you to stay on top of your spending and adjust to keep within your budget.

If you’re not tech-savvy, consider using a simple spreadsheet to track your spending. Itemize all expenses and detail the purpose, cost, and payment methods. Keeping receipts can also be helpful for tracking expenses.

Many apps can help track your expenses and stick to your budget if you prefer to use a budgeting app. Visit your app store on your smartphone and search “budgeting apps” to find one that appeals to you. We recommend Mint.

How to Stick To Your Holiday Budget

Set Aside Money Each Month

One of the best ways to stick to a holiday budget is to plan and set aside money each month leading up to the holidays. Determine how much you need for your anticipated expenses, and divide that amount by the number of months until the holidays.

Set aside this amount each month in a designated holiday savings account, and use that money to cover your expenses during the holiday season. This approach will help alleviate financial stress and prevent overspending.

How? It allows you to pay for expenses from savings rather than credit, preventing unnecessary debt. It also helps ensure you have enough money for your holiday expenses and reduces the temptation to overspend.

Remember Your Why

When holidaying, getting caught up in gift-giving and overspending can be easy. In those moments, remember why you created a holiday budget and promised to stick to it in the first place.

Maybe it’s to avoid debt or save for a vacation or a new house. Whatever your reason may be, keep it at the forefront of your mind and remind yourself of it when you’re tempted to overspend.

Gift-giving is a large part of holiday spending, but remember that it’s not about how much money you spend on gifts. It’s about showing your loved ones that you care and appreciate them. Consider giving homemade gifts or finding deals and discounts.

Shop Online and Compare Prices

Take advantage of online shopping and compare prices to find the best deals. Use websites and apps like Honey or RetailMeNot to find coupon codes and discounts, and consider signing up for loyalty programs at your favorite stores to save even more money.

Additionally, take advantage of free shipping offers and try to consolidate your purchases to minimize shipping costs. And don’t forget to factor in sales tax when comparing prices – sometimes, it’s cheaper to shop at a brick-and-mortar store and pay sales tax than to shop online and pay to ship.

The money you save by shopping smart will help you spend within your holiday budget and potentially even save more.

Shop Early

Start shopping early to maximize sales and avoid the last-minute rush (and potential overspending). If you have difficulty resisting impulse purchases, set a limit on how much you browse online or in stores.

You can also save money when you shop during post-holiday sales when prices are significantly lower. Stock up on gift wraps, decorations, and gifts for the following year; you can save money and prevent stress during the next holiday season.

Shopping early means planning, so you may have to create your holiday expenses and budget earlier. But, the effort will pay off in saving money and reducing stress. So, go for it!

Drive to Reduce Travel Costs

During the holiday season, travel expenses can add up quickly. Consider driving to your destination instead of flying to save money on transportation costs.

If driving is not an option, look for deals on flights and consider carpooling or using a rideshare service to save on transportation once you arrive.

And don’t forget about accommodations – instead of staying in a hotel, see if there are alternative options, such as renting a vacation home or staying with family and friends.

It’s Time to Make Your Budget

As the saying goes, failing to plan is planning to fail. Take the time to create a holiday budget and stick to it during the holiday season. Remember your why, shop smart, and consider alternative options for travel to save money and stick within your budget.

In the end, you’ll be grateful you planned and stuck to your budget – and you can enjoy the holiday season without the added stress and burden of excessive spending. Happy holidays!

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Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.