Knowing how to create a family holiday budget can help you avoid unnecessary financial stress. Buying gifts, planning parties, or booking vacations can be expensive, and it’s easy to overspend if you’re not careful.
However, creating a realistic budget can help you stay within your financial limits. Although it does require a bit of planning, budgeting for the holidays is crucial to managing your expenses. That way, you can enjoy this festive season with your family without the added pressure of financial instability!
How to Create a Family Holiday Budget
Look at Your Current Financial Situation
Before you establish a holiday budget, you’ll want to take a good look at your current financial situation. This includes your income, savings, monthly expenses, future tax payments, and debts. Based on these things, you can get a better understanding of what you’re comfortably able to spend without overstretching your finances.
Dipping into your savings or taking out loans may not be the best idea. This can cause more financial stress that could impact your financial situation for the rest of the year. Instead, you’ll want to look at what liquid cash you have available to cover your holiday expenses.
Set Clear Goals
Once you have a better idea of what you can spend, we recommend setting goals for what you want to do during the holidays. Are you using this money towards gifts for your kids? Or will it be spent on family dinners, holiday parties, or a winter vacation?
Start by making a list and breaking down your goals into different categories. To help you prioritize what is important, make sure this list is in order of importance.
Create a Holiday Budget
Determining an amount for your holiday budget can be a tricky task. But it’s a key step as its one of the most important factors to help you avoid overspending.
After assessing your financial and holiday goals, you’ll need to come up with a total number of how much you’re willing to spend. Take a look at the list of priorities you wrote down (gifts, travel, decorations, entertaining, etc.). For each of these holiday goals, write down a rough amount of what you’ll feel comfortable spending on each one. Don’t forget to give yourself some wiggle room in case things end up being more expensive than you think.
Once you set your budget, consider letting children who no longer believe in Santa know how much you plan to spend on each of their Christmas presents that year. That way, they can select gifts within your price range and still get what they want!
In fact, having an open discussion about spending habits (or even setting up their own tracking and investing app) can teach them financial responsibility.
Track Your Spending
As the holiday season progresses, it’s crucial to track your expenses to make sure you’re sticking to your budget. There are several different ways you can do this. You can use a budgeting app, spreadsheet, or even pen and paper.
Adjust Your Budget If Needed
It’s very important to stay flexible with your family holiday budget. Once the holidays roll around, you might find that your priorities of what you want to spend money on have shifted. This could be caused by unexpected costs or last-minute price changes.
If these things pop up, then you’ll need to adjust your budget to accommodate these changes. For example, you might need to cut back on food costs if you end up spending more on gifts than you originally planned.
Review Budget and Plan for Next Year
After the holidays are over, take a seat and analyze how well you stuck to your budget. This can teach you how to create a family holiday budget for the following year. Perhaps there are things you didn’t account for in your initial planning that you need to consider in the future.
This can also be a good time to set up a holiday fund for next year. Contributing more to a savings account, trading crypto or bitcoin, or investing in NFTs are just a few ways to increase your spendable income.
How to Save Money This Holiday Season
Start Shopping Early
Take advantage of sales that happen before the hectic holiday rush. Not only can you score great deals, but it also reduces the likelihood of making impulsive purchases. Here are a couple of pre-holiday opportunities where you can save money:
- Black Friday
- Cyber Monday
- Small Business Saturday
- Green Monday
- Early Bird Sales
Consider DIY gifts
You don’t have to spend an arm and leg on gifts for your loved ones. Handmade gifts can be an affordable alternative to help you save money during the holidays. In addition, it also makes gift-giving more personal and memorable, which many people appreciate more than a purchased gift!
If you are throwing a party, you can also DIY your decorations instead of buying them in the store.
Look for Discounts
Discounts and coupon codes are excellent opportunities to maximize your savings during the holiday season. Take the time to look online for special offers to reduce what you spend on gifts, travel, etc.
Earn While Shopping
There are some great apps on the market that allow you to earn money by shopping with participating partners. When you make a purchase through the app’s link, you’ll earn a reward. This could be a cash back transfer or even a gift cards= for future purchases.
It’s easy to get stressed during the holidays, especially if you are trying to save money. But knowing how to create a family holiday budget can keep you financially on track. After all, the holidays are more about spending time with friends and family and less about the amount of money spent. So while party planning and gift giving are fun, make sure you give yourself time to focus on what truly matters. Creating lasting memories with the people you love most!
