For many people, holiday finance is one of the most stressful things about the festive year-end season. Today’s article shares nine practical tips to make your holidays financially stress-free.
In this article:
- Acknowledge the Challenge of Holiday Finance
- Set — and Stick to — Your Holiday Finance Budget Plan
- Carefully Choose the People You’ll Give Gifts To
- Consider Other Ways to Give and Receive Gifts
- Can’t Afford It? Don’t Buy It!
- Give the Gift of Your Creativity and Effort
- Shop Wisely
- Share Holiday Hosting Duties
- Remember the Reason for the Season
Holiday Finance: 9 Holiday Financial Planning Tips for Successful Holiday Budgeting
1. Acknowledge the Challenge of Holiday Finance
If you want to successfully address a concern, the first step is to acknowledge it. Unless you acknowledge it or are aware of the concern, you won’t be in any position to do anything.
Knowing is half the battle for your holiday finances. Once you know the enemy, you can prepare for it mentally, emotionally, and in this case, financially.
This holiday season, the first crucial holiday finance step you’ll need to take is to acknowledge the challenge it’ll pose. The successes of your preparations and implementations depend on it.
2. Set and Stick to Your Holiday Finance Budget Plan
Think of your holiday finance budget as guardrails on the side of a cliffside road. Without it, you can easily fall off a financial cliff by spending more than what you can afford.
How should you create your budget? There are several ways of how you can set your holiday finance limits:
- Check your bank or credit card statements from the last two holiday seasons. These give you an idea of how much you should set for this year’s holiday finance budget.
- Estimate your total net income for the holiday season, such as estimated salaries or revenues minus your estimated expenses. If you have a positive expected cash flow, that means you have more income than expenses. This amount can be your maximum budget.
- Think about the maximum amount you’re comfortable spending this holiday season and make that your budget. Make sure it’s an amount that won’t get you buried in debt.
Then, create sub-budgets to have a greater degree of control. Distribute your maximum holiday finance budget across different expenses, such as:
- Gifts for family members
- Giving gifts to friends and other people
- Other holiday expenses like traveling out of town
3. Carefully Choose the People You’ll Give Gifts To
One of the biggest holiday finance mistakes people make is giving gifts to practically everybody they know. And by “know,” the relationship can be as trivial as an acquaintance or a distant work colleague.
If you set a budget, you have two options:
- Give lower quality gifts to as many people as possible.
- Bless as few people as possible with the highest quality gifts you can afford.
Remember, you’re not obligated to give gifts to everybody you know or who knows you during the holidays. You give gifts as a voluntary act of love and friendship, not as a legal or moral obligation to fulfill.
If you really think about it, there’s not a lot of people you want to give holiday gifts to. The few that you’d likely want to bless with holiday gifts include your folks, siblings, spouse, kids, some close relatives, and friends.
4. Consider Other Ways to Give and Receive Gifts
Yes, you want to save money during the holidays this year and beyond. Chances are, it’s not just you but others in your family and circle of friends, too.
Why not talk to them about setting spending limits even before the holidays kick off and people start shopping? You can also try talking about forgoing gift-giving altogether this season, too.
Giving gifts isn’t the only way to show love and appreciation during the holiday season. Others give the gift of time as a way of blessing their loved ones and closest friends during the holidays.
For example, you can volunteer to babysit for a couple who have a baby and haven’t been able to go out on a date in a long while. Without spending money, you can give these two close friends a priceless gift of being able to spend time with each other for a day or two.
Or, you don’t have to scrap giving gifts altogether. You can change the way you give holiday gifts.
For example, replace individual gifts with family gifts instead, like a box of home-baked cupcakes the entire family can share. It’ll come out cheaper and less stressful than giving each member of a family a gift.
5. Can’t Afford It? Don’t Buy It!
In 2016, investment management company T. Rowe Price reported that 25% of American parents had to use their savings, retirement plans like 401(k)s, or salary loans for holiday expenses. Clearly, they couldn’t afford to finance their holiday plans on their own, hence the need for financing.
If you can’t afford to buy something during the holidays that’s neither urgent nor an emergency need, just say no. You don’t have to buy it because it’s the holidays.
If you’re worried that you, your kids, your spouse, your parents, or closest friends will die from not getting the holiday gifts they want or you think they deserve, guess what? They won’t.
If they feel bad about not getting a gift you can’t afford, their feelings will pass.
Think about it: is it worth accumulating debt to please people with gifts they want but don’t need?
6. Give the Gift of Your Creativity and Effort
If you have a lot of free time and are particularly good at making unique and personalized things, why not give handmade holiday gifts? Not only can it save you money, but it can also even be more meaningful to your recipients because you made them.
Some people appreciate homemade gifts than store-bought ones because of the love and effort that went into it.
7. Shop Wisely
Particularly for pricier holiday gift items, compare prices from different stores and brands first before buying during the holiday shopping season. Sometimes, taking extra time and effort to look for better deals online can spell the difference for your holiday finances.
Whenever you buy holiday gifts, especially pricey ones, look for similar things on online stores like Amazon or eBay first. That way, you’ll know if you’re paying more or if you’re getting ripped off with exorbitant prices.
Speaking of online shopping, save even more money by timing your holiday purchases on days that offer free shipping. Check your favorite online stores for details on upcoming free shipping days this season.
8. Share Holiday Hosting Duties
Whether your family or friends are eating holiday dinners at your place or crashing for an entire week, make sure your expenses fit into your holiday budget. If not, don’t be afraid to ask your guests to pitch in.
The best way to host holiday lunches or dinners? Host a potluck, which can help you save money and make guests feel more involved.
9. Remember the Reason for the Season
There’s a reason for the season, whether it’s for religious beliefs, enjoying the holidays with loved ones, or both!
Unfortunately, popular culture has made the holidays more about material things and consumerism. No wonder most people feel the holidays are one of the most financially stressful times of the year.
If you keep in mind why you’re celebrating the holidays, religious or otherwise, it’s easier to keep finances in check. You’ll realize you don’t have to spend so much money to enjoy the season.
Not only will your heart be full, but your bank account can also be, too.
The holiday season is one of the most anticipated and favorite times of the year for most people, but it can also be very stressful for others. With proper holiday finance planning, you can make the holidays the most wonderful time of the year.
Which of these holiday finance tips will you apply this coming holiday season? Let us know in the comments section below!