Every year there are a few traditions that you can count on no matter what. This remains true even on this chaotic 2020. And as the year comes to a close you can be certain that there will be a holiday season this year, although it will most likely be a very unique experience with fewer and smaller gatherings as well as more time spent at home.
As hard as it may seem now, some holiday traditions will stay almost the same, specifically the desire to spend a little extra money on food, drinks, decorations, and gifts. For most people this translates directly into taking on credit card debt, which in these uncertain times can be a very risky move.
To help you avoid taking any unnecessary financial risks, we have prepared a few tips to help you make a budget for the upcoming holiday season.
1. Set Spending Limits
Take an honest look at your financial situation and determine exactly how much you can afford to spend without taking on any extra debt. Then divide that sum into relevant categories such as presents, food, parties, decorations and wrapping, a Christmas tree, travel expenses, extra electricity costs, and other holiday activities.
2. Write Your Budget Down
Although having a budget in your mind is better than not having one at all, writing your budget down is the way to go. Research shows that writing your goals down, and a budget is really a goal for your money, makes you 1.5 times more likely to achieve that goal.
3. Make A List
Include everybody you would like to give a gift to and then set the amount you would like to spend on each person right next to their names. This is where it can get a bit tough, and you might find that you need to make multiple adjustments, reduce a few amounts, and even cut some people out completely from the list. Remember that this is completely fine and even a healthy thing to do. You can always bake some cookies for those you cut out of the list, just remember to put that cost in your budget.
4. Be Realistic About Your Budget
Every person has a different financial situation and short, medium, and long-term goals. It is important that you are very realistic about your own situation when you make your budget, instead of comparing it to last year or, worse yet, to somebody else’s situation.
5. Track Your Spending
With so many ways to track your spending, including apps, widgets, worksheets, etc., there really is no excuse for not monitoring the money you spend. Preparing and writing down a budget are easy tasks. But spending your money exactly the way you planned to, down to the last cent, now that takes discipline. And if you don’t track your spending, you will surely spend more money than what you wanted to in the first place.
6. Communicate Openly
Talk to your family and friends about what everybody is planning for the holidays and commit only to the things you can afford to. It is very important to be clear about what you can actually afford to do this year in order to manage everybody’s expectations. So if you will only get presents for the kids in your family, or only buy something for your parents, or if you want to host a giant dinner party instead of giving any gifts at all, that is totally fine as long as you communicate clearly. This will ensure that nobody is disappointed, and you won’t feel pressured into spending more than you budgeted for.
Remember that the holidays are a special time to share with family and friends, and not a time to feel stressed out at all. Making a budget will definitely help you relax and enjoy the holidays to the max.