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Budgeting for the Holidays

Posted on November 4, 2015

A woman looking at Christmas decorations

It seems as if the summer was just here with fun days at the beach and lounging by the pool. But now fall has arrived with winter nipping on its heels, heralding the arrival of the holidays. Have you started shopping yet? Don’t want to even start worrying about it yet? That may be because you don’t have the money budgeted for the onslaught of the holiday season. With our handy tips and resources, you can successfully create a budget and stick to it.


A major part of affording the holidays is the gift giving that ensues. Take a look at last year’s spending and keep it in mind while budgeting for this year. Was it an affordable amount? Did you go way overboard, paying your credit card bills off for months? This year, come up with a figure you can afford in each category. Make a list of all people you want to buy for, and a limit on how much you want to spend on each, from spouse and kids to coworkers and kids’ teachers.

If your holiday spending has gotten out of control, do something different. If you have a big family or lots of friends, suggest a gift swap or Secret Santa rather than feel obligated to buy for every single person. This way, you can still have a fun party, every person leaves with a gift, yet no one goes broke in the process. Alternatives include:

  • Buying “family” gifts that both kids and adults can enjoy, such as movie theater tickets, restaurant gift cards and miniature golf passes. 
  • Making your own gifts, such as cookies in a jar, homemade scarves and even personalized stationery.
  • Hold a cookie swap.
  • Give low-cost gifts such as $1 lottery tickets to keep costs low.

Related Expenses

It’s not just about the gifts when it comes to holiday expenses. There are parties, traveling costs, entertainment and meals. Practical Money Skills suggests coming up with a “micro budget” featuring a set limit, keeping in mind that you shouldn’t spend more than 1.5 percent on your annual income on total holiday expenses. While the holidays are an ideal time to get together with fellow employees, friends and family, entertainment expenses can certainly get out of control too. No need to cater a big affair. Instead, suggest a potluck dinner where everyone brings a dish, or you could serve just appetizers and drinks at a time when people have already had their evening meal at home. Better yet, a holiday dessert party can be just as festive and much more affordable.

Stretch your Holiday Dollar at the Store and Online

Part of being an educated shopper is being a savvy consumer. That means you have to do your research and take the time to make wise purchases rather than impulse buys. With 53 percent of American consumers planning to conduct part or all of their holiday shopping online this year, according to Gallup, it’s more important than ever to be prepared. First, come up with a spending plan and know your limits. Keep track of everything you spend, either on paper or with a budgeting software. Take a list with you when you go shopping to avoid impulse buys or wasting time, says Bankrate. Bring cash. If you don’t have enough cash, you’re done shopping for the day.

Using these tips to budget for the holidays will not only help you save money but hassle and time too.

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