How to Build a Holiday Budget
The holiday season is approaching, and with it comes lots of extra expenses for gifts, travel, dinners, and celebrations. Planning your budget for October, November, and December can seem like a daunting task, but when you follow the steps in this article, creating a holiday budget and sticking to it will be easy. Your future self will thank you for taking the time now to plan for holiday expenses.
Understand Your Holiday Expenses
Before you can plan for anything, you have to understand what kind of holiday expenses you’ll need to budget for. There’s the obvious costs of buying holiday gifts, but also consider if you’ll be traveling for the holidays, if you’ll be hosting holiday get-togethers, or if you’ll be attending holiday parties. Once you can see what you need to save money for in addition to your regular expenses, you’ll have an easier time planning your budget.
Set Your Overall Spending Limit
After you’ve thought about what you’ll be spending money on, take a realistic look at how much you can comfortably spend in addition to paying your bills and mandatory expenses. Remember to leave yourself a financial cushion as well for winter-time emergencies. Once you’ve made up your mind about how much you can spend, commit to that amount.
Divide Your Budget by Category
Now that you have your spending limit set, divide it up between your holiday spending categories. Set a maximum spend for holiday gifts, holiday travel, holiday parties, and any other categories you may have. Once you create a budget for each category, you’ll know if you need to save a little more money to make your holiday budget work.
Make a Detailed List
Once your category budget spending limits are set, make a detailed list of what you need for each category. For example, if you’re planning to travel for the holidays, you’ll have to consider how much your plane ticket costs, what it will cost to get to the airport (taxi, gas money), if you’re going to spend money leaving your car parked at the airport, how much baggage fees will be, if you’ll want to buy food and drinks at the airport, etc. Then, attach a dollar amount to each list item. This way, you know exactly what you can spend on each specific item down to the penny. Lists also help with things like holiday shopping because they keep you focused and stop you from spending randomly.
Stick to Your Budget
Having a set dollar amount for each item you’ll need this holiday season is the key to sticking to your budget. Even if you’re tempted to travel more, pick up extra holiday gifts, or spend more on food or drinks at a holiday party, don’t. This will only take away from your budget for other things, and could even put you in a situation in which you can’t pay your bills – which no one wants to be in ever, but especially around the holidays.
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