Good Cheer Begins With A Holiday Spending Plan

Now’s the time to create a spending plan and make arrangements to stay on track and avoid overspending during the holidays.

Most people welcome the holidays with open arms as it brings many reasons to smile. The delight in the carols, the scents, the spirit of giving, and the beautiful things the holidays bring.

However, many aren’t fond of the long list of expenses that come with it – travel, holiday festivities, and the list of gifts. Use our tips to avoid overspending.

Your Holiday Spending Plan

Review Finances  

Determining how much you can afford to spend this holiday season is likely not as complicated as you think.

Start by calculating your income then look at previous months to predict your future monthly expenses. Deduct your projected expenses from your income to see what remains.

You may set these “leftover” funds aside for holiday expenses but make it a point to modify projected expenses as you see fit when creating your spending plan. For example, if you’ve spent $200 on dining out and entertainment last month, aim to only spend $100 on eating out during the holiday months so you have another $100 to add toward your holiday budget.

Make A Plan  

Once you have a good understanding of your finances, it’s time to create a budget and plan how you’ll spend your funds. Consider what matters most to you during the holiday season – which activities/traditions are absolutely necessary and which ones can you go without? Be sure to talk with your family and friends about their thoughts and expectations for the holidays. But ultimately, prioritize your funds on what makes you happy.

Stay Focused  

It’s easy to use credit cards to buy now and pay later while taking advantage of perks like cash-back and zero fraud liability. If you do this and pay your balances off in full each month, that’s great. But it can be a slippery slope if you’re not careful and don’t have a plan.

With all the holiday and day-to-day expenses, it’s easy to swipe away without knowing what’s been spent to date. Failing to keep track and to stick to the plan could mean acquiring more debt and having to pay interest on holiday purchases.

Use cash, write things down, or use financial tools to keep up with expenses. Apps like this import information from various financial institutions so you’re able to see most of your financial accounts in one place. How great is that?

Plan For Next Holiday Season

Tracking your expenses this holiday season will also help you create a savings plan for next holiday season. With the right strategy, the saving process can be very simple.

Pro tip: Try our free savings goal calculator to figure out how much you should save monthly to help with expenses next year.

One option is to use a separate savings account for the holidays. In doing this, you give your funds purpose, and it’s not just an account that has extra funds that may be withdrawn at any time.

A second suggestion is to make saving automatic. Modify your direct deposit to have a portion of your check redirected or set up an automatic transfer between your accounts. You’ll know it’s getting done and you won’t have to do a single thing once established.

Summary

It’s easy to get overwhelmed during the holidays, but a little planning can help you have a peace of mind and enjoy more moments with family and friends.