The holiday season is upon us, which means we are preparing for the joyous food, festivities, and gifts that we love to share with loved ones... but unfortunately, that comes with extra expenses, too. 

Avoid the extra financial stress by creating and sticking to a holiday budget, so you can enjoy this time of year without breaking the bank. In this blog post, we will be going through the steps for creating a holiday budget, tips for how to stick with it, and ways you can get extra support. 

Creating Your Holiday Budget 

1. Review your current income and expenses 

How much are you able to set aside each month after you account for necessary and priority expenses like rent, bills, food, retirement savings, emergency funds, etc.? You can use this amount multiplied by however many months you have before holiday spending begins as a baseline for your budget. 

If you already have been setting money aside for extra expenses like this, that’s great! Add whatever funds you are comfortable using into your budget and note the total that you will have to reasonably spend given what you have planned to save. 

2. Review last year’s holiday spending 

If you are planning on doing the same type of festivities and expect to have the same type of expenses as last year for the holidays, review your bank statements to figure out: 

If this number is similar to or less than what you have already determined you are able to spend in step one, you’re off to a great start! However, if this number is larger than what you are reasonable able to save, it’s time to figure out where you can reasonably cut costs. 

3. Outline your anticipated spending 

Now that you have a general framework for what your budget might look like, it’s time to get more specific about where your money can be expected to go. This is particularly important if you expect your spending or income to be drastically different than the previous year. 

Start by creating categories and list out every possible expense you can think of that might be associated with each. Some typical options include: 

4. Determine where you need to cut back on costs 

Now that you’ve determined any potential costs in each category, compare this to the general budget you already set earlier. If you already outlined costs from last year and determine what worked and what didn’t, this part should be fairly straightforward. If you’ve gone through any big financial changes or your plans are different than last year, this is where you might need to spend more time.  

Go through and identify what costs are fixed vs. flexible to help you figure out where you can potentially reduce costs, if needed. Your goal is to get your combined total for every category to add up to the budget you’ve identified previously. (If you can add in a little wiggle room for unexpected expenses, even better.)  

If you need some help figuring out how to reduce spending, here are some ideas to consider for each category: 

• Travel: 

  • Purchase flights, hotels, and rental cars using saved up credit card points 

  • Book travel as far in advance as possible, when rates are cheaper 

  • Use more affordable methods of transportation (driving or taking the train vs. flying) 

  • Offer to host festivities yourself, if it makes sense for you (note that this may come with additional food and decor costs). 

• Gifts: 

  • Set spending limits with your loved ones by agreeing to an affordable spending cap and/or by suggesting a Secret Santa or White Elephant exchange instead, which allow you to buy only one present instead of many. 

  • Go with something homemade – We get it... not everyone is a DIY crafting afficionado, but you can get creative by making gifts that are thoughtful and still fall within your skillset (homemade cooking or bathing salts, candles, snacks, soaps, and coasters are all fairly easy, to name a few, and there are plenty of additional ideas online). 

  • Consider experience gifts – There are all kinds of fun experience gifts you can do with loved ones that are affordable. This probably won’t work for everyone on your list, but if you know of free or low-cost events or activities that your loved one enjoys, take them there instead of buying something. 

• Food: 

  • Choose affordable restaurants – There are so many hole-in-the-wall restaurants that are delicious and affordable, and it can be a great excuse to try something new. 

  • Find recipes that use more affordable ingredients if you are planning on cooking or baking – If you’re deciding between recipes, choose the option with cheaper ingredients or figure out where you can use substitutions that are more affordable. 

• Entertainment: 

  • Pick free events instead like a stroll in a neighborhood known for holiday lights, menorah lighting, or other community events. 

  • Get tickets to smaller community holiday shows instead of big productions – Not only do they tend to be more affordable than the professional companies, but it’s a great way to support your community. 

• Decor/attire: 

  • Make handmade decor – There are all kinds of fun crafts out there to make garlands, ornaments, menorahs, etc., and you can even turn making decor into a fun (affordable) activity to do with your loved ones. 

  • Thrift decor and attire, which can make for some really cool and unique finds! 

  • Plan to purchase your items in January, when everything is on sale, for the following season.

• Donations: 

  • Volunteer time or donate unwanted items instead of making monetary donations – If your budget is tight, but you still want to make a difference, consider volunteering at a food bank or for a holiday toy drive. You can also find out what physical items local charities may be in search of and donate any new or lightly used items that they may need. 

Now that you’ve identified where you can save and solidified your totals so that they match up with what you’ve set for your budget, your holiday budget is ready to go! The trick now is making sure to stick to it. 

Sticking with Your Budget 

Once you’ve created your budget, the next hurdle is sticking with it, which can be hard when we are constantly being bombarded with things to buy and experience all season long.  

Here are a few tips to staying on track: 

• Keep track of your spending – Every time you make a holiday-related purchase, make note of it in your budget and identify your new remaining total. Credit card apps can make this simpler (if you know all your spending is happening in a certain time frame) by automatically putting purchases into categories for you to review.  

• Make adjustments as needed – If you waited too long to buy that plane ticket or you found the perfect gift that is a little outside of budget, go back to your budget and identify where you can make new changes to accommodate for that unexpected expense.  

• Understand buy now, pay later terms – If you’d like to use buy now, pay later options for any of your purchases, make sure you understand the terms and are prepared to pay it back before any additional interest or penalty fees kick in. 

• Use cash or debit cards – We all love us some credit card points, but if you have a tendency to overspend or avoid keeping track when using a credit card, you can either try paying your card off frequently or consider using cash or debit instead, so you don’t have the option to use funds that aren’t there.  

• Put a little extra work in to find great deals – November is sale season, so if you can determine where you want to purchase gifts from ahead of time and then be added to a newsletter or check back regularly, you can make sure to take advantage of potential deals on items you already know you want to buy. The same goes for different events – there are different sites and apps that give you discounts for tickets, especially if they’re purchased last-minute. All it takes is a little research, and having this extra room in your budget could help give you the ability to reallocate those funds to other things. 

Get Support through Coaching and Holiday Loans 

If all of this is overwhelming, consider working with a financial coach. At Self-Help, we offer financial coaching free to members, where you can get individualized support in developing a spending plan that works for you. 

Additionally, if unexpected expenses come up or if you already know that your expenses will outweigh your funds, consider a holiday loan. Our holiday loans can reduce financial stress by helping you get the funds you need without the worry.  

While taking out a loan may not be your first choice, if excessive spending this season seems inevitable, you are better off with a holiday loan than with credit card debt, which tends to have much higher interest rates. This is a simple, short-term solution with fixed interest rates for a loan you can afford. Learn more about how to apply here. 

Be Better Prepared for Next Year 

Now that you’ve gone through all this work to figure out your budget for the holidays, take some of the stress off next year: 

• Make note of what worked and what didn’t or where you went over or under your expected costs as they come up throughout the season. Not only does this help you readjust for any issues as you go, but it also sets you up better for next year, so you don’t have to remind yourself of everything that came up at a later date. 

• Start to save for next year’s holidays in January (or as soon as you are able). Since you already know your general budget (assuming next year’s plans will be similar), you can calculate how much you should be putting aside starting in January to help ease some of the financial burden once holiday season comes around again. 

• Buy gifts or purchase tickets throughout the year when there are special events or sales, which can help you save money and spread out the burden of your holiday expenses. 

Money can create stress during this time of year. However, if you take the extra time to develop a realistic budget and stick with it, you can encourage conscious decisions about how you’re spending your money that won’t come as a shock when you get your credit card statement. It is our hope at Self-Help that these tips will help you have an easier, more joyful holiday season.