5 Steps to Budget for Holiday Shopping

The holidays are a time of joy, happiness, and celebrations when families and friends gather from near and far to spend time together. The season is undoubtedly a special time of year. Yet all the celebrations, travel, entertainment, gift-giving, and food and drink associated with the festive season come with a sometimes-hefty price tag.

 In fact, according to MarketWatch, 36% of American shoppers incurred holiday debt in 2021. These days the holiday spending period seems to grow longer with each new year, with holiday shopping and decorating beginning before Halloween is even a distant memory. For some, the thought of the upcoming holiday season can bring stress and worry rather than happiness and excitement.

The good news is, weathering the holiday shopping spree and staying sane doesn't have to be an impossible task. Setting aside time to plan and make a budget allows you to save money and be more prepared as the season approaches. This way, you can focus more on enjoying the best parts of the holiday with your loved ones. The more planning you do in advance, the better off you'll be. Follow these 5 steps to help create a budget, get set up for stress-free holiday shopping, and avoid post-holiday debt.

1. Understand Your Finances

The first step in creating a workable budget for your holiday shopping is understanding exactly where you're at with your personal finances. This step isn't necessarily a fun task, but it is important. Understanding the state of your finances will help you determine how much you can afford to spend on gifts and personal needs.

Examine your monthly income and outgoing expenses to identify what you have remaining at the end of the month. These remaining funds are your disposable income, and the amount you spend on holiday gifts and expenses should be equal to or less than this to avoid post-holiday debt.

Build more flexibility into your budget by reducing the number of expensive gifts you plan to buy. Consider lower-priced gifts as an alternative or making handmade items.  Suppose you cannot avoid the number of gifts or know a big-ticket item is on your list. In that case, you can prepare in advance by opening a separate personal checking or personal savings account specifically for holiday shopping. 

 

2. Determine Your Budget

To fully understand what you should spend on holiday shopping, create a budget that details your necessary living expenses, such as housing, insurance, groceries, gas, utilities, and other costs. Once you identify your income and basic expenses, you'll better understand how much is available to spend on gifts, celebrations, travel, and other holiday needs. Subtract your expenses from your income; the remaining figure is the amount you can spend on your holiday needs without going into debt. If you wish to narrow this down to what you can spend specifically on gifts, subtract the amount you anticipate spending on travel, celebrations, and other holiday needs. The total you are left with is your gift budget.

Fully understanding your budget allows you to make a shopping plan that fits your budget. You may need to spread your purchases over a longer period of time or consider more online deals. Either way, having a good understanding of your budget will be extremely useful.

 

3. Organize Your Gift Lists

With your spending budget set aside, the next step is to allocate where that money will go by organizing your gift lists. Create a budget worksheet or a list where you outline a gift budget for each person on your list.

Start by writing down every person you need or want to buy a present for, including family, friends, and coworkers; don't forget your furry four-legged family members too. Decide how much to spend on each and assign a dollar amount. Then brainstorm gift ideas for each equal to or below what you've budgeted. Make sure you jot down your ideas next to each name. This list will help you stay organized, remember everyone on your list, and help keep you within budget.

Organizing-your-gift-list-will-help-you-stay-within-your-budget.

4. Price Shop for Deals

Research is often the key to smart holiday shopping that keeps you within your budget. If you have multiple gift options in mind for everyone on your list, you can start by tracking the best deals to purchase. Get the best price by checking different stores, online shopping, or using product review and comparison tools.

As the early bird most often gets the worm, you can also take advantage of Black Friday, Cyber Monday, and other holiday sales to get the best deal on your desired present.

 

5. Stick To Your Budget

It's tempting to overindulge during the holidays when everyone is full of joy. But learning to create a budget and sticking to it is vital if you want to come out of the holiday season without a mountain of debt. Some people may find it easier to commit to a budget by withdrawing money and using cash to pay for gifts, while others prefer using credit cards. If you use the cash method but find it necessary to use a credit card for online purchases, remember to deduct the amount from the money you withdrew and deposit it back into your account to pay off your credit card.

If you can stay below your budget, reward yourself - buy yourself a gift, make a charity donation, or use these funds to pay off another debt. Or, use these unused funds to open a new savings account earmarked for next year's holiday shopping spree. Saving a little over a longer period can add up faster than you think.


Make the Most of Your Budget with Middlesex Federal

It's easy to get caught up in the excitement surrounding the holidays, and suddenly, the rush to go holiday shopping sneaks up on us. Preparing ahead can help you feel in control and save your finances and budget from taking a massive post-holiday hit.

Making sure you stay within your budget and make smart financial choices will help avoid post-holiday stress when it's time to pay for all your shopping. A Middlesex Federal checking account offers customers the convenience of online and mobile banking, which can help keep track of holiday shopping even when you're out and about. To help you stay within budget, use the mobile app to manage your debit card and set up alerts and notifications. To learn more about the benefits of a Middlesex Federal checking account, visit us online or contact us today.

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