‘Tis the season to start trimming – your budget, that is, and not just your tree. A November 2013 Gallup poll found that while the average American originally expected to spend around $786 on the holidays back in October, that number is now down to $704. While it’s true that the general public might have a little less to spend, that reduction is also indicative of the changing mindset of spending as a whole. Consumers with big eyes are now wary of a volatile market and, consequently, of putting too much of the holiday season on plastic. This means more restricted budgets.
By saving and spending wisely, your holiday season doesn’t have to be a total budget-buster. Follow the lead of the average American and try trimming your expenditures without sacrificing any of the holiday experience.
Spending and Saving During the Holidays
Before you hit the mall or organize a big party, it can help to have a comprehensive plan in place so you know exactly where your money is going this holiday season – that way, you can ring in the new year with celebration rather than panic. Here are several ways to keep your spending under control this December.
1. Make a Budget
There are a couple different ways to set a holiday budget. You might want to establish a general spending cap, or try allocating a specific amount to each person on your gift list. Be aware, though, that while making a holiday budget is great, it can go sour in one of two ways:
- Setting a Budget That’s Too Tight. While setting a tight budget always starts with good intentions, an unrealistic one can do more harm than good. Without a little wiggle room for last-minute purchases or enough cash allocated for your mom’s gift, you can end up very frustrated. In fact, you might get so frustrated that you just toss your budget out the window. To prevent this from happening, look over your numbers. Do you really need to spend $50 on wine, or can you cut back in order to allocate more money to gifts instead? Don’t just pick numbers out of thin air – really think things over to ensure that you make the right decisions.
- Forgetting the Little Things. Gift giving is a huge expense during the holidays, but don’t forget the other costs you incur throughout the season. Parties, travel expenses, charitable donations, and holiday-themed activities can all add up to destroy a budget. If possible, add some money into your budget for unexpected costs so you’re not left scratching your head.
The way you create your budget is up to you, but one thing’s for sure: you need one. Create yours before the season hits full steam, and revisit it often to make sure you’re spending within your means.
2. Track Your Spending
Your budget does no good if you don’t effectively track your spending. Personally, I keep a separate Christmas fund in a dedicated bank account. This makes it easier for me to separate holiday spending from regular, day-to-day expenses. I also have my bank’s app on my phone, which allows me to check my balance and track my spending anytime, anywhere – even in line for the cashier.
Spreadsheets are also an excellent and accurate way to track your holiday expenditures. By establishing a budget and entering your real expenses, you can easily keep yourself on track. Just be sure to remain diligent. I find that if I can track my expenses in real-time, I’m much more effective than if the receipts are lying around for days before I input them into my system.
3. Cut Back on Extras
Getting lattes piled sky-high with whipped cream, splurging on a pair of shoes for yourself, paying for a photo with Santa – we’re all guilty of indulging a little more than we should simply because it’s the holiday season. However, you can’t get stuck in a trap where constant spending on “extras” eats into your budget.
Cutting back on those extras can have a big impact on your bottom line. For example, if you purchase a $4.50 pumpkin spice latte three times per week throughout December, that’s $162 you’ve spent on pricey drinks. That money could have paid for a few Christmas gifts, enough gas to get to Grandma’s house, or a generous donation to a charity of your choice. Before you splurge on a little treat or “extra” for yourself, be sure it’s really worth the price.
4. Use the “Secret Santa” Method
I have four brothers and one sister-in-law on my side of the family, and three brothers-in-law and three sisters-in-law on my husband’s side. Add in the 11 nieces and nephews, and buying for the family becomes a huge expense – not to mention a major drain on my schedule. Instead of buying for each member of the family or even pulling names out of a hat, we’ve decided to funnel our resources into a Secret Santa experience instead.
Our local church decorates a tree with ornaments, each decoration with the age, gender, and specific Christmas wish of a child in need. Instead of buying presents for my own family members, we choose to purchase gifts for the anonymous beneficiaries. The best part is that each individual family chooses as many ornaments as they can afford – some can buy for an entire family, while others can pick one or two ornaments to fit their budget. In the past, my kids and I have had fun picking out toys, clothes, and books for children of a similar age.
Not only does a Secret Santa experience help relieve some of the stress and financial burden of exchanging gifts with every member of my family, it gives us a chance to talk about the importance of service and giving during the holidays. I love that my kids get a break from the “gimmes” and get to focus on someone less fortunate.
Some other ideas for charity during the holidays include the following:
- Toy drives
- Volunteer work
- Baking treats for neighbors
- Assembling care packages for shelters, hospitals, or the armed forces
- Coat drives
- Donating to charity
Funneling what you would have spent on family gifts to those in need is a great way to give back, have a charitable experience with your loved ones, and relieve holiday stress.
5. Choose Cheaper Traditions
Traditions are what make the holidays so special, but they can be a financial burden. If your traditions include holiday travel, paying for a special attraction, or surprising your kids with extravagant gifts, you might find yourself going significantly over budget in the name of family.
While traditions are important and admirable, they don’t have to be expensive to be memorable. In fact, you might find that your kids prefer the cheap stuff to the grander gestures. So many activities and traditions are inexpensive, or even free – you just have to know where to look. By making cheaper events and traditions part of your celebration, you can save money without skimping on the festivities and memories.
Here are some of my favorite cheap activities:
- Touring neighborhood Christmas lights
- Watching a movie with hot chocolate at home
- Seeing Santa at the mall
- Making Christmas crafts
- Baking together
- Reading favorite Christmas stories
- Seeing a high school production, such as a play or choir performance
- Checking daily deals, such as those on Groupon or LivingSocial, for discounts on local attractions
Teach your kids that traditions aren’t about what you spend, but the time you spend together.
6. Embrace Potluck
We host Christmas Eve for our extended family every year at our home. I love prepping, cooking, and having everyone together for Christmas - but you know what I don’t love? How expensive all the food, decor, and activities always are. Buying food for 30 people is seriously pricey, and if not for potluck assignments, I’d be spending most of my Christmas budget on food and drink.
Now, I’ve learned my lesson – if you’re hosting an event, embrace the idea of potluck assignments. Let everyone know you’re going to make the main dish, but that you’d appreciate help on sides, appetizers, desserts, and drinks. I simply send out an email a few weeks in advance letting everyone know what their assignments are to ensure we don’t end up with five vegetable trays and no dessert.
I also assign Christmas games and activities to some of my teen nieces and nephews. They love being involved, and I don’t have to stress about keeping guests entertained.
7. Take Care Around Sales
Holiday sales can be an epic opportunity to save money – but be careful. Not all deals are created equal, and some may not even be truly discounted, as some stores keep prices the same but simply mark items with a “sale” sign.
Always comparison shop before you purchase an item during a sale. I use the ShopSavvy app – it allows me to scan the bar code of any item and see prices at nearby stores and Internet retailers to make sure I’m getting the best deal. Or, if you tend to fall victim to the festive atmosphere of a store and make unwise purchases, try shopping solely online. You can snag great deals and use coupon codes to get a lot more for your money.
Of course, you never save money by spending, no matter how significant the discount. Sales are great, but they don’t mean much if the money isn’t in your budget. If necessary, bring a printout of your budget so you can check your spending in real-time and avoid being swayed by a screaming deal.
8. Know When to Stop
When your list is finished and you’ve checked it twice, it’s time to stop shopping. Know when you’re finished, and avoid stopping by the mall “just to see what they have” – this can lead to making poorly planned purchases and blowing your budget.
I typically get the itch to shop a few days before Christmas, so I specifically save shopping for stocking stuffers until the last minute. That way, I’m still operating within my budget and purchasing something I actually need while fulfilling the urge to be part of the holiday hustle and bustle. By planning purchases and stopping when you’re done, you can be spared that holiday hangover come January.
9. Get a Head Start
The period right after the holidays is the perfect time to check over your budget and make plans for the new year. How did you do? Did you stay within budget? Were there places you could have cut back?
This is also the time to start planning a credit card payoff strategy if you used plastic to finance your festivities. In a perfect world, you wouldn’t have put anything on your credit card that you couldn’t pay off in a month, but if you went overboard, commit to a payment plan that eliminates your balances within the next three or four months.
If you’re really savvy and have the storage, the days following Christmas are also ideal for getting a jump-start on purchasing decor and wrapping goods for next year. Of course, that’s only if you’ve budgeted accordingly.
It’s all too easy to get caught up in the spending cycle during the holidays. Marketing campaigns are geared toward making you open your wallet in the spirit of Christmas, so it’s hard not to fall prey. However, if you’ve got a plan in place and know how to stretch each holiday dollar, you don’t have to fear your bank account statement on December 26th. Cheaper entertainment, a focus on family, and a sensible spending plan put you firmly in the driver’s seat of your own sleigh.
Do you have a holiday budget? How do you save money during the Christmas season?