It’s that time of year again. The holidays might be an exciting time, but it’s also stressful, especially for the wallet. We all want to save money during the holiday season, but it can be difficult when you’re feeling the pressure to buy fantastic gifts for everyone on your list. The good news is, there is a secret to creating a holiday gift budget that works. The bad news is, if you’re reading this in December, it’s probably too late.
The secret to creating a holiday gift budget that you can actually stick to is to create it at the beginning of the year. That being said, while it might be too late to budget the right way for this Christmas, January is around the corner, and so it’s the perfect opportunity to get into this habit for next year.
Why do you need to create a holiday budget 11 months ahead of time? Because Christmas is expensive! When you start thinking about the holidays, most likely in October or November, odds are you don’t have enough excess budget to cover the costs of gifts for everyone on your list. But if you put a little money aside each month from January until December, you should have more than enough to cover the costs and not have to rely on using your credit card for holiday shopping.
So, this holiday season, get a head start and make your holiday 2023 budget. Here are 4 tips to get you started:
- Open up a separate bank account. Most banks will allow you to make new accounts for free and you can usually do so online. By opening a separate bank account that you can contribute money to every month, you’re unlikely to spend your holiday funds on other things.
- Map out a budget. Look at all your expenses from this past holiday season. It should give you a sense of how much you’ll likely spend next year. Divvy up your expenses into categories like food, decorations, gifts, etc. This will allow you to see more granularly where you are spending your money. Add up the totals and divide it by 12. This is how much money you need to save per month throughout 2023 to ensure you have enough money next year.
- Start saving. Now that you know exactly how much money you need to put aside each month, you’ll need to start saving. For example, if your total holiday budget is $1500, you’ll need to save $125 per month starting in January. Where will you get this money from? You’ll have to revisit your existing budget to see if there are some adjustments that need to be made. If it’s difficult to put aside this amount of money each month, then consider re-adjusting your holiday budget to reduce the number.
- Adjust your budget throughout the year. Budgets are not supposed to be broken, but that doesn’t mean they can’t be adjusted. Based on external factors, you may find yourself with more or less money throughout the year. If you come into a big tax refund, for example, maybe you can use that to top up your holiday budget and reduce the monthly contribution. You may also need to add or remove people off your gift list throughout the year. If this is the case, then it’s okay to reallocate your budget and adjust it appropriately.