Building a Holiday Budget

Although the holidays are a joyous time to celebrate our family and friends, they also can place a strain on our finances. Even if your household has not felt the financial impact of the COVID-19 pandemic, be sensitive to what other family members or friends might be experiencing. They may be relieved by your suggestion to reduce expenses this holiday season.

You can alleviate some of the stress by looking ahead and following a spending plan. Start with the major categories of holiday spending (split between gifts, decorations, travel, and food); for example, see below for very basic versions of a holiday budget outline:

Gifts
Determine your budget for gifts and take time to jot down who you’re giving gifts to, what you want to get them, and what the cost is of each gift you’re planning to give. This will help you determine if your gift lineup will fit in the budget. Consider leaving some wiggle room in your budget for things like a last-minute invite to a party with a gift exchange.

• Budget Total
• Gift & Cost
• Gift & Cost (repeat as necessary)
• Cost Total

If you create your list and find that you’re going over budget, consider the following ideas to reduce gift costs:

• Arranging with family or friends to not exchange gifts
• One large family gift
• Make personalized gifts
• Set a price limit for gifts
• Comparison shop to find the best deal

Decor
Holiday decorations are fun and get us in the spirit of the season. They can also cost a pretty penny, so planning ahead can help. As with gifts, see what you can budget for decor specifically, then look at what you want to add to your collection. You can do this for each holiday.

• Budget Total
• Decoration Item & Cost
• Decoration Item & Cost (repeat as necessary)
• Cost Total

To reduce decor costs, consider the following:

• DIY decorations ‐ make it a fun family activity
• Reuse last year’s decorations

Oftentimes, decorations will go on sale close to or the day after the holiday with which they’re associated. If the current price doesn’t fit in your budget, you could also consider waiting until the day after the holiday and seeing if the sale price now fits in your budget. Just make sure you put the decorations in a storage spot where you’ll remember when next year rolls around.

Travel
Talk to your family and decide early on whether travel is going to be an option. If you do hope to travel, budget your options. Remember to do this for each holiday.

• Budget Total
• Method of Travel & Cost
• Method of Travel & Cost (repeat as necessary)
• Cost Total

To reduce or plan for travel costs, consider:

• A remote or video gathering
• If you or your family want to avoid close quarters, you may need to plan for the extra costs of a hotel stay.
• If the weather allows, it may be possible to organize an outdoor event.

Food
From Halloween candy to Thanksgiving turkey to Christmas cookies, we all have some delicious treat that we look forward to having this time of year. You get the idea now. Time to plan ahead for all those mouth-watering dishes.

• Budget Total
• Dish & Cost
• Dish & Cost (repeat as necessary)
• Cost Total

You can break down the cost even more by writing out all the ingredients for the dishes (if you’re making it rather than buying already made) and their costs. To reduce food expenses, consider the following:

• Research grocery stores to see who has the lowest price point for the items you need
• Opt out of Halloween candy distribution
• Consider a potluck-style meal
• Offer to help cook or clean instead of bringing a dish

What next?
Budgeting early on and being aware of your limits can help you avoid holiday debt. One of the best ways to prepare for the holiday season is to start saving as early in the year as possible. Contributing to your total budget month-by-month can make a big-spend goal reachable. With careful planning, you can keep financial stress out of this holiday season.

The bullet points shown above are simple examples of ways to think ahead and keep an eye on your cash flow. For help with budgeting, monitoring cash and keeping track of irregular expenses, check out MSA Wallet. It’s an easier, fancier way to see all of your accounts in one place and plan out your finances. You can also talk to a Money Coach about how to plan for irregular expenses that creep up during the holidays and throughout the year, or talk about any other financial goal that’s top of mind. Call today!