6 Budgeting Tips to Help You Save Money on the Holidays

 It’s that time of year! It’s an exciting time of year, with many reasons to be happy. However, while the holidays can be extremely festive, they can also be extremely expensive due to gifts, decorations, and other expenses. And you realize that only when you check your check stubs. 

If money is tight this year, consider reducing your holiday spending. You could begin by combining a reasonable budget, useful financial tools, and prudent savings strategies. If you do, you can still have a wonderful holiday—and perhaps even begin the new year in a better financial position.

1. Start Planning Your Holiday Budget Early

Are you ready to plan your holiday shopping? Making a budget early on can be a good place to start. This is because a budget can help you be more intentional about what you buy — and don’t buy — during the season. 

It can also give you more time to plan your purchases with savings in mind, lowering your chances of going into debt. You’ll also be less stressed about holiday shopping and activities, so you might even enjoy the season more.

2. Make an Inventory

Another easy way to stay within your budget is to inventory what you already own. There may be items hiding in storage areas such as closets, the attic, or the basement that could help you save money for the holidays.

This category may include old decorations that you still need to remember. Clothing that piqued your interest could do the same. Unopened packages you intended to gift—or regift—in previous years may also qualify.

3. Change Your Expectations

Budgets, like many other aspects of life, can benefit from a positive attitude and a willingness to adjust expectations. So, if money is tight this year, be willing to change how you celebrate.

For example, you could openly discuss holiday spending with family and friends and agree on a spending limit.

Consider adopting more cost-effective traditions. With a little creativity, the possibilities are endless, such as driving around in the evening to look at holiday lights, attending a holiday parade, or baking together as a family.

1. List and Categorize Holiday Spending

Do you want to know how to make a holiday budget? Begin by making a holiday shopping list to keep track of your expenses. You can organize your list by major expense categories, such as gifts and travel, and then itemize your anticipated expenses under each.

Consider adding the following major holiday spending categories to your list:

• Gifts

If you’re like most people, one of your major holiday expenses is gifts. So make your list and double-check it! Checking it several times a day can help you stay on track.

You can make the holidays magical on a budget with your chosen gifts with little effort. Check out this holiday gift guide if you’re looking for more inexpensive gift ideas.

• Food and Entertainment

There are so many fun things to do during the holidays that it’s tempting to try them all. Add a food and entertainment category to your list to help you keep track of your spending.

Holiday plays and shows, concerts featuring seasonal songs, and related expenses such as holiday photos of the kids could all be part of your entertainment budget.

Ingredients for the holiday cookies you bake yearly or the dish you bring to the office holiday party could be food-related expenses. You could also include the cost of preparing a special meal for family and friends. 

• Holiday Decorations

Decking the halls can be one of the most enjoyable aspects of the holidays. However, the costs of adding holiday cheer to your space can quickly add up, so make a decorations category for your list and itemize expenses under it.

• Holiday Attire

Dressing up for the holidays is enjoyable but can also be costly. Add a holiday attire category to your shopping list.

Items in this category could include a special dress for a holiday dinner at your favorite restaurant and outfits for the kids to wear when they visit Grandma and Grandpa. As with gifts and decorating, doing some attire planning ahead of time can help you stick to your budget.

• Travel

You may also need to add a travel category depending on your situation. In any case, there are options if you want to travel on a budget. Instead of flying, consider taking a road trip. Alternatively, to save money, book flights well in advance.

Consider applying for a travel rewards credit card to earn points or miles for your purchases.

1. Set Holiday Spending Limits

You could set spending limits on your holiday shopping as part of your efforts to save money. You could begin by doing the following:

1. Determine how much money you’ll need for regular monthly expenses. Make a list of your monthly expenses and the amount of money you’ll need to cover them.
2. Determine how much you expect to spend during the holidays. Examining your previous year’s holiday spending can help you estimate your costs for this year.
3. Establish a holiday spending limit. Once you’ve identified your business-as-usual and previous year’s holiday expenses, you can set a holiday spending limit based on your current financial situation. You may have more—or less—money to spend this year, but at the very least, you’ll have set some reasonable spending limits.

6. Shop Smarter

Looking for ways to shop smarter can be a good idea all year long, especially during the holidays. Here are some ideas for getting the most for your money.

• Shop Online

You can use the internet’s speed and reach to help you save money by shopping online. This could include searching multiple websites for the best deal on a special gift. You can also use online coupon codes to save money when making an online purchase.

• Compare Prices

Comparing prices is a simple way to save money on your purchases. In-store, you can compare similar items from different brands with a simple side-by-side price comparison. You could also use a price comparison app or a Google search to find a lower price on a given item quickly.

• Shop Sales—but Avoid Shopping Sprees

One benefit of shopping this time of year is that major shopping events are designed to help retailers increase sales while saving consumers money.

Of course, you should avoid impulsive holiday shopping. However, shopping strategically during events such as Black Friday, the day after Thanksgiving in the United States, can be advantageous. Remember Cyber Monday, the Monday after Thanksgiving.

• Consider Layaway

Layaway can allow you to be more flexible in approaching your holiday budgeting. Although it is less popular than it once was, the good news is that it is still widely available.

Making a down payment on a large purchase and paying for it in installments is what layaway entails. The retailer holds the merchandise until the balance is paid in full.

• Use a Credit Card to Earn Cash Back on Purchases

Another option to control holiday spending is using the right credit card. Consider applying for a credit card with a low introductory rate. You could use it to make holiday purchases before incorporating it into a long-term strategy to build, improve, or maintain good credit.

Another option to consider is a cash-back credit card. With these cards, you can earn cash on everyday purchases like shopping, gas, and dining. This could mean more money in your pocket as you try to finish your holiday shopping.

Learn more about the benefits of using credit cards for earning rewards, building credit, managing finances, and other purposes.

Holiday Budgeting in a Nutshell

As the holiday season approaches, take a deep breath and make a plan. Remember that even if the holidays are low-key, they can be fun.

To begin, create a reasonable budget. Locate a digital tool to assist you in keeping track of your spending. Limit your shopping to major events such as Black Friday and Cyber Monday to maximize savings.

With your budget and spending plan, you can sit back, relax, and have fun!