PRE-HOLIDAY BUDGETING: 10 TIPS FOR SMART HOLIDAY SPENDING
The holiday season is just around the corner, and we know what that means: gift shopping, festive gatherings, and (let's be real) a potential dent in our wallets. In fact, a survey by NerdWallet found that roughly half—52%—of holiday shoppers in 2023 still had holiday debt from the previous year to deal with!
But fear not! We're here to help you navigate the most wonderful time of the year without sacrificing your financial sanity.
LEARN: How to Budget Money: A 5-Step Guide - NerdWallet
Tip #1: Start Saving Early (Like, Now!)
Open a dedicated Holiday Savings Account and set aside a fixed amount each week or month. This way, you'll have a separate fund for holiday expenses and avoid dipping into your everyday savings. If you haven’t done it yet, you can always do so for 2025.
💡Idea: It could also help to pull your bank and credit card statements from last year to see what you spent your money on and if:
- you were happy with how you were spending your money
- had categories that may no longer apply
- your budget may have changed due to life changes, like having a baby or changing jobs
Tip #2: Set a Realistic Budget (No, Really, Be Realistic)
Make a list of all your holiday expenses, from gifts to decorations, and allocate your funds accordingly. Don't forget to include a buffer for unexpected expenses (because, let's face it, they always pop up).
💡Idea: Since gifts are often the biggest part of your holiday spending, consider homemade gifts instead! Buy supplies in bulk and create something meaningful for your friendly, family and neighbors.
Get some ideas here from CountryLiving: 120 Easy Homemade Christmas Gift Ideas on a Budget 2023 (countryliving.com)
Tip #3: Prioritize Your Spending (Gifts for Grandma or a New TV?)
Identify your non-negotiables (e.g., gifts for loved ones) and allocate your funds accordingly. If you have money left over, you can splurge on something nice for yourself (because self-care is important, too!).
💡Idea: If you’re not concerned with treating yourself—or you’ve already done it plenty this year—consider tipping a service provider, such as a delivery driver, doorkeeper, or mail carrier!
Figure out how to calculate a tip for your service provider in this guide: How Much to Tip Just About Everyone - NerdWallet
Tip #4: Avoid Credit Card Debt
If you don't already have a credit card, consider applying for one with a low interest rate and no annual fee. Just remember to pay off your balance in full each month to avoid interest charges. Plus, credit cards are a great way to keep online shopping more secure as some credit cards such as Bank Plus’ have fraud monitoring and zero fraud liability, as well as chip card security.
💡Idea: Remember to cash in any credit card rewards or points you've earned, as well as paying with any unused gift cards you may be holding on to!
Tip #5: Take Advantage of Cashback and Rewards
If you do have a credit card, make sure it offers cashback or rewards on your holiday purchases. This way, you can earn points or cash towards future expenses.
💡Idea: Some credit cards also allow you to redeem points on gift cards, which you could use to purchase gifts for your loved ones at various stores, saving you even more money.
Tip #6: Get Creative with Gift Giving (It's the Thought That Counts, Right?)
Consider DIY gifts, secret Santa exchanges, or experiences (like cooking classes or concert tickets) instead of physical presents.
💡Idea: Sometimes, quality time is the best gift of all. Consider bringing your loved ones to take photos with Santa, and attend holiday parties or free events at your local library! Drive around and look at beautiful decorations or join a community tree or menorah lighting.
Tip #7: Shop Smart (Black Friday, Cyber Monday, and Beyond)
Research deals, use coupons, and take advantage of price-matching policies to get the most bang for your buck. Getting a head start on your holiday shopping will help ease the stress of doing it last minute later.
💡Idea: Subscribe to newsletters and alerts from your favorite retailers to hear in advance about exclusive deals and discounts (some of which are reserved for subscribers). You can also follow your favorite shops on social media to get real-time updates on upcoming deals.
Tip #8: Don't Forget About Charitable Giving
Allocate a portion of your holiday budget to charitable donations. You can even set up automatic transfers from your Holiday Savings Account to make giving back easy and convenient.
❓Did you know? Not only will you be giving back to your community, but you can also deduct these donations on your taxes, which can help reduce your taxable income. Just be sure to keep receipts and documentation for your donations.
TIP #9: USE THE 50/30/20 RULE
Allocate 50% of your holiday budget towards necessary expenses (gifts, food, etc.), 30% towards discretionary spending (decorations, entertainment), and 20% towards saving and debt repayment.
💡Idea: Setting aside $10—or any amount you would prefer—each week or day for even a short while can make a major difference. If you’re feeling the holiday shopping pressure, consider doing a group gift.
Read more about this here: The 50/30/20 Budget Rule Explained With Examples (investopedia.com)
Tip #10: Review and Adjust (Because Life Happens)
Regularly review your holiday spending and adjust your budget as needed. Life can be unpredictable, and it's essential to stay flexible and make changes to avoid financial stress.
💡Idea: The best way to avoid holiday debt is by paying with cash or debit, but you can also use credit cards and buy now, pay later plans such as Afterpay and Klarna, which can help you conveniently break purchases down into smaller payments.
There you have it – 10 tips to help you navigate the holiday season with financial finesse. By following these tips, you'll be able to enjoy the festivities without breaking the bank.
At Bank Plus, we're committed to helping you achieve your financial goals. If you have any questions or need assistance with your holiday budget, please don't hesitate to reach out to us.
Happy Holidays from Bank Plus!