Before you hit the mall or organize a big party, it can help to have a comprehensive plan in place so you know exactly where your money is going this holiday season – that way, you can ring in the new year with celebration rather than panic. Here are several ways to keep your spending under control this December.
1. Make a Budget
There are a couple different ways to set a holiday budget. You might want to establish a general spending cap, or try allocating a specific amount to each person on your gift list. Be aware, though, that while making a holiday budget is great, it can go sour in one of two ways:
•Setting a Budget That’s Too Tight. While setting a tight budget always starts with good intentions, an unrealistic one can do more harm than good. Without a little wiggle room for last-minute purchases or enough cash allocated for your mom’s gift, you can end up very frustrated. In fact, you might get so frustrated that you just toss your budget out the window. To prevent this from happening, look over your numbers. Do you really need to spend $50 on wine, or can you cut back in order to allocate more money to gifts instead? Don’t just pick numbers out of thin air – really think things over to ensure that you make the right decisions.
•Forgetting the Little Things. Gift giving is a huge expense during the holidays, but don’t forget the other costs you incur throughout the season. Parties, travel expenses, charitable donations, and holiday-themed activities can all add up to destroy a budget. If possible, add some money into your budget for unexpected costs so you’re not left scratching your head.
The way you create your budget is up to you, but one thing’s for sure: you need one. Create yours before the season hits full steam, and revisit it often to make sure you’re spending within your means.
2. Track Your Spending
Your budget does no good if you don’t effectively track your spending. For example you can open a separate bank account dedicated for your Christmas fund. This makes it easier for me to separate holiday spending from regular, day-to-day expenses. You can also have the Hela247 app on your phone, which allows you to check your balance and track my spending anytime, anywhere – even in line for the cashier.
By establishing a budget and entering your real expenses, you can easily keep yourself on track. Just be sure to remain diligent. I find that if I can track my expenses in real-time, I’m much more effective than if the receipts are lying around for days before I add up the totals to track my expenditure.
3. Cut Back on Extras
Splurging on a new TV, or paying for a photo with Santa – we’re all guilty of indulging a little more than we should simply because it’s the holiday season. However, you can’t get stuck in a trap where constant spending on “extras” eats into your budget.
Cutting back on those extras can have a big impact on your bottom line. Before you splurge on a little treat or “extra” for yourself, be sure it’s really worth the price.
4. Choose Cheaper Traditions
Traditions are what make the holidays so special, but they can be a financial burden. If your traditions include holiday travel, paying for a special attraction, or surprising your kids with extravagant gifts, you might find yourself going significantly over budget in the name of family.
While traditions are important and admirable, they don’t have to be expensive to be memorable. In fact, you might find that your kids prefer the cheap stuff to the grander gestures. So many activities and traditions are inexpensive, or even free – you just have to know where to look. By making cheaper events and traditions part of your celebration, you can save money without skimping on the festivities and memories.
Teach your kids that traditions aren’t about what you spend, but the time you spend together.
5. Take Care Around Sales
Holiday sales can be an epic opportunity to save money – but be careful. Not all deals are created equal, and some may not even be truly discounted, as some stores keep prices the same but simply mark items with a “sale” sign.
Always comparison shop before you purchase an item during a sale. Of course, you never save money by spending, no matter how significant the discount. Sales are great, but they don’t mean much if the money isn’t in your budget. If necessary, bring a printout of your budget so you can check your spending in real-time and avoid being swayed by a screaming deal.
6. Know When to Stop
When your list is finished and you’ve checked it twice, it’s time to stop shopping. Know when you’re finished, and avoid stopping by the mall “just to see what they have” – this can lead to making poorly planned purchases and blowing your budget.
7. Start a Holiday Fund Early
If you know that you are going to spend Kshs. 5,000 – 20,000 on gifts, food, and travel over the holidays, start saving for them as early as possible.
If you start stashing Kshs. 500 or so each month into a holiday savings account, you will have all the money you need when the holidays roll around. If you start a little bit late, that is ok, too; just increase the amount of money that you are saving each month so you meet your goal at the end of the year, and have all the holiday money you need. And if you aren’t disciplined or otherwise able to save each month, any little bit that you are able to stash over the year will make your holiday cash outlays that much more manageable when December rolls around.
It’s all too easy to get caught up in the spending cycle during the holidays. Marketing campaigns are geared toward making you open your wallet in the spirit of Christmas, so it’s hard not to fall prey. However, if you’ve got a plan in place and know how to stretch each holiday dollar, you don’t have to fear your bank account statement on December 26th. Cheaper entertainment, a focus on family, and a sensible spending plan put you firmly in the driver’s seat of your own sleigh.
Do you have a holiday budget? How do you save money during the Christmas season?
This article was originally published in Money Crashers.