‘Tis the Season to Start Your Holiday Budget and Savings Plan
The leaves are changing, there’s a slight chill in the air, and decorations and yummy treats are filling up grocery store shelves. The holidays are quickly approaching, and it’s time to start budgeting, saving, and creating a spending plan for the season.
Having a budget as we head into the festive (and expensive) holiday season will allow you to enjoy exciting activities, delicious meals, and gift-giving. You’ll also spend less time scrambling and stressing over finances when you have a spending plan in place.
Holiday Season Costs
Amid the busy holiday season, it can be easy to get carried away and not have a clear understanding of just how much you’re spending. There are many occasions in the last few months of the year to prepare for.
Americans spend a little over $100 per person for Halloween festivities, including costumes, candy, and decorations. This amount doubles if you have children in your household.
In 2021, Americans spent approximately $448 on Thanksgiving and $430 on Black Friday.
Most Americans plan to spend about $1,000 on Christmas gifts.
Remember that these holidays will cost significantly more if you plan to travel for them, especially with current inflation. Airfare is up approximately 33%, hotels are up about 5% and food is up about 8% from this time in 2021.
Holiday Budget Tips
There are many ways in which you can prepare your finances for the upcoming holiday season.
Be specific and personalized: Saving for the holidays is going to look different for everyone. The key is to pick the amount of money and timeframe for saving that best fit your lifestyle and budget.
How did your holiday budget look last year? Were you surprised at how much you spent? Did you experience any credit card debt come January? Look over your spending and see where you’d like to improve this year.
If you don’t have a lot of disposable income each month, you’ll need to start saving for the holidays in July or even in January. If you do have a healthy monthly excess to spend on miscellaneous items, then you may only need a couple of paychecks to hit your holiday savings goals.
Be reasonable: Common financial advice says you shouldn’t spend more than 1% of your income on holiday travel and gifts. That means if you make $70,000, you shouldn’t be spending more than $700 on holiday expenses.
If we look at the above numbers on how much holidays typically cost, 1% of our budget doesn’t seem like it will get us too far. Intentionally cutting back on other line items in your budget or picking up a side hustle and designating your income to the holidays can help you stretch beyond 1%.
Start early: Create your holiday budget now so you can see where to allocate your funds. If you don’t plan on traveling, then you can plan for more elaborate decorations, gifts, and dinners. If you will be traveling, tell your friends and family you’d like to forgo gifts and instead have time together be your gift.
Shopping early will also help you utilize sales and spread out your expenses over a couple of months.
Get creative: When looking at your list of who you’d like to give to, think outside the box! If you have children, consider having them make homemade cards and gifts for close family and friends. Or propose a gift exchange with those you’ll be celebrating with so you’re only spending money on one gift.
Contemplate giving your time and talents instead of more material objects. Maybe you are a skilled craftsman who can create unique gifts or you can offer your handyman services for an afternoon.
If you want to plan a holiday but don’t want to blow your whole budget, try planning a potluck, decorating from the dollar store, and playing a white elephant game. These will help you keep costs down while still having a great time.
Executing Your Holiday Spending Plan
As the holiday season approaches, it’s important to execute your holiday spending plan accurately.
Stick to your budget: You put a lot of time and effort into creating your budget and saving, don’t derail your success by getting off-budget.
Don’t linger in stores: Impulse shopping is a surefire way to kill your budget. Go in with your shopping list and don’t stray. If you need accountability, take a friend with you or pull out the exact amount you budgeted for in cash.
Use a spending tracker: If you don’t already have a digital expense tracker, I recommend using one, especially during the holiday season. When you’re busy and distracted, it’s easy to forget a transaction here and there. This is a great way to track your planned spending versus your actual spending.
Value time and relationships: The true reason for the holiday season is celebrating with friends and family. Material items and special dinners can certainly add to the holiday season magic, but they aren’t the most important thing. Don’t feel you need to prove your love and appreciation by going into debt.
The holiday season is a time for enjoying special experiences and being with those you love. Being on a budget and executing your well-organized spending plan doesn’t have to feel stifling. It should feel empowering entering into the season knowing you are financially prioritizing what matters most to you.
Get Ready for the Holiday Season with Financial Fitness Coaching
At Financial Fitness Coaching we want to help you master your budget and cash flow all year long, especially during the holiday season. If your financial life needs a kickstart or simply a fresh set of eyes, we’d love to connect and help you!
We offer both business and personal financial coaching and are trained in an incredibly effective cash flow strategy called Profit First. As a Profit First professional, I can help you separate your business and personal finances, erase your debts, conquer your taxes, and much more.
To see how we can help you and your business email me at kristen@financialfitnesscoaching.com or simply schedule a free 20-minute Discovery Call on my calendar.