Now that you have a master list of people you’re shopping for and what you’re buying them, it’s time to go Christmas shopping! You’re ready right?
What’s that? You haven’t even begun to prepare for the holidays yet?
Well if you feel like the holidays are about to roll right over you, don’t panic. And whatever you do, don’t let the January You hate the December You–there’s still plenty of time to get a plan in place that won’t jeopardize your finances in 2020.
To be sure you can afford to go holiday shopping, start by evaluating your overall holiday expenses so they don’t sneak up on you. Here’s how!
Zeroing In on Your Holiday Dollars
We know how tempting it is to indulge more at the end of the year, then excuse it in the name of all the cheer going around. But the holidays are not an excuse to skip budgeting. Just as you won’t want any extra holiday pounds slowing your progress with New Year’s fitness goals, you also won’t want bad financial decisions to wreck your New Year’s budget.
To avoid that, treat your holiday budget exactly the way you already treat your zero-based monthly budget—give every dollar of holiday income a job to do. That just means giving every dollar an expense to cover, and keeping on until you reach zero.
It’s really that simple. And we’ve seen two great ways to do it.
Choose Your Zero-Based Method
To make your holiday budget happen, use one of two tried-and-true money methods: the free EveryDollar budgeting app or some good old-fashioned spending envelopes. (If you just like seeing your plans on a screen but also love envelopes, you can even use both methods at once!) In either case, you’re using spending categories with pre-set dollar amounts inside. As long as you have money available in a category, spend to your heart’s content! But when you hit zero, you’re done until payday rolls back around.
And here’s a related friendly warning—don’t take out any loans or use credit cards to fund your holidays. Why not? Because no gift or holiday indulgence is worth the pain of future payments and interest. The goal of a SmartDollar holiday plan is to create a zero-based budget, cash-flow everything, and avoid financial regret in the New Year!
Tips to Help You Stick to Your Holiday Budget
Once you have your numbers, it’s your job to stick to that budget and resist impulsive holiday splurges. And depending on your seasonal needs and wants, you might need to trim some dollars from other categories. Here are a few tips to help you shape a realistic holiday budget:
Go back and look at what you spent during the holidays last year. Include categories like gifts, parties, extra food when hosting, travel, and tithing or charitable giving. Were you able to cash-flow everything holiday-related last year? If so, you can probably give that budget an encore. But if you resorted to borrowing or late payments, be ready to move some dollars from flexible spending categories to cover the holidays.
Keep that list of last year’s holiday spending categories handy. Whether you’re planning to adjust the dollar amounts or not, it’ll be a useful guide for the kinds of things you’ll probably buy again this year.
Don’t skimp on your gift budget. Gifts are typically the largest category in most holiday spending plans. Not to mention the period between Black Friday and Christmas Eve has a way of multiplying in your mind the number of people you’d love to buy gifts for!
Know your limits. In case you’re having a little trouble stretching your gift budget to cover everyone on your list, you have a few options. Since this time of year lends itself well to crafts and baking, maybe you can make something lovely and creative for people at home for cheap or free. Or choose to limit your purchases only to gifts for the kids.
If you’re in need of an easy way to organize your holiday shopping, download the EveryDollar app today! You can assign a job to every dollar of your income, including the gifts you’re looking for as you shop. Then log into SmartDollar to learn more about taking control of your finances.
Don’t have a SmartDollar login? Contact your HR department for info on how to enroll or read more about bringing SmartDollar to your company here!