During the holidays, it’s easy to go over budget. After all, there are tons of Christmas decorations to put in every room, Hanukkah gifts to buy, and Kwanza or Ramadan festivities to dress up for.But while enjoying the holidays is great, no one wants to ruin important financial goals by overspending during the holiday season. To avoid overspending this holiday season, we spoke with financial planners, advisors, and business strategists. Here are their top tips to make sure you stay on budget this year.
Bring a Shopping List to the Black Friday Sales
In the months leading up to the winter holidays, there are numerous sales, from Home Depot Decor Days to Amazon Prime Days. With so many discounted items, it’s easy to want to buy everything. That’s why it’s important to keep a shopping list and stick to it.”Sales are designed to create a sense of time pressure,” explains Elizabeth Pennington, CFP®, a certified financial planner at Fearless Finance.But sometimes sales only offer small discounts. And if you know what you want and how much it usually costs, you can resist the pressure to buy the entire store. Pennington suggests arriving at a Black Friday sale prepared with a list of the items you want to buy and noting how much they previously cost.“Tools like CamelCamelCamel can help you track an item’s price history and determine if you’re actually saving money by buying it at a specific time,” says Pennington.Want more design inspiration? Sign up for our free daily newsletter to get the latest decorating ideas, design tips, and more!
Create a Monthly Budget
Create (and stick to) a monthly budget.. “An effective budget will give you a clear idea of where your money will go,” says Sophoan Prak, CFP and financial advisor at Vanguard. Knowing how you plan to spend your monthly budget can help you prepare for the holidays by determining where you can spend more or less.For example, perhaps you can reduce your monthly allowance for eating out and set aside that money for holiday shopping. Planning for holiday fun will help you avoid overspending and ensure you have sufficient funds, says Prak. This way, you’ll avoid relying too heavily on credit cards or borrowing money for your other long-term goals.
Don’t wait to shop until the last minute
With several weeks before the big holidays, you can easily spread out your spending. And the sooner you start holiday shopping, the better. That’s because spreading out your expenses offers two advantages.First, you can ensure your spending doesn’t come all at once, eating into an entire month’s living expenses allowance. And second, taking the time to shop at the right prices can help you avoid deadline pressure, which Pennington says can cause you to intentionally underspend and therefore be less frugal.Pennington explains that she typically shops for holiday gifts throughout the year when she sees something someone in her life would love. She then keeps all of these gifts in one place and notes on her phone what she’s bought for each person and who she still has to buy for.
Temporarily unsubscribe from store emails
Overspending can have a psychological component. And the more emails you receive from your favorite stores alerting you to sales, the more likely you are to overbuy.So, if you’re drawn to the constant emails your favorite stores send you, unsubscribe from their newsletters, at least until the holidays are over. You might miss a sale or two, but buying only what you need at full price will save you more money than buying too much at a discount, Pennington says.Plus, thinking less about big-box stores might encourage you to look for unique items you find at estate sales or flea markets.
Transfer your money to savings
One way to avoid overspending is to set up automatic transfers to your savings accounts. This way, the money you’ve earned will be out of sight and mind (and off your debit card) before you have a chance to spend it on holiday shopping.”It might be especially helpful to set up ongoing distributions from your paycheck to an account like a high-yield savings account,” Prak recommends.This way, the money you save can earn you a return. Plus, making investments like these can help you plan for next year’s holiday spending or prepare for long-term goals, like retirement.
DIY Whenever Possible
Another great way to avoid overspending this time of year is to make things at home, either for your own use or to give as gifts. This is what celebrity business strategist and stylist Nina Vargas calls “meaningful gifts.”Doing DIY at home can involve baking treats, crafting, or offering a thoughtful gift to someone.”Personal touches are always priceless, meaningful, and very valuable,” she says.Or, if DIY isn’t your thing, clean out your closet and gift or repurpose what you already have if you think it might look better in someone else’s home. Just make sure the gift is meaningful and thoughtful, Vargas advises. So, as you shop your closet with others in mind, try to be intentional about your gift-giving, identifying items your friends and family will love.