Budget Planning During the Most Wonderful (and Expensive) Time of Year
It’s the most wonderful time of the year! There’ll be parties for hosting and marshmallows for toasting - but maybe added stress in there too. Christmas is the special season to spend time with family and friends. But for many of us, this holiday is also filled with expenses that leave us financially short going into the new year. Knowing how to plan a proper budget will keep you on track with your Christmas spending and help you make the most of this season.
Emergency Fund vs. Christmas Fund
When you’re already on a tight income each month, preparing for special occasions like Christmas can feel particularly overwhelming. If you cringe at the word “budget,” you’re not alone. Many people struggle when creating a budget for their monthly spending. And without this financial guide, it’s easy to overspend during the holidays.
Although Christmas comes every year, few people financially plan for it. And as those Christmas expenses start to add up, some people tap into their emergency savings, if they have any. This lack of budget planning can create problems in the future when you need money for actual emergencies, such as unexpected car repairs.
Make a smarter budget by treating your Christmas fund as separate from your emergency savings. Christmas is an anticipated expense that happens every year, which means you have time to plan for these expenses. By making special occasions like Christmas part of your annual budget, you won’t leave yourself short when more serious financial issues arise.
Make a Christmas Gift Budget
One thing to consider when creating a Christmas budget is how much you can afford to spend on gifts. Sometimes the excitement of finding the perfect gift for someone can make us lose focus on how much we can actually spend on these purchases.
Planning a Christmas gift budget can help you avoid spending money you don’t have. First, make a list of everyone you plan to buy gifts for and estimate the amounts that seem reasonable to spend. Then take a look at the income you’ll have set aside to save for this total amount. Taking into consideration how much time you’ll have to save for this fund, does this amount seem feasible? If not, you may need to adjust how much you can afford for gifts. You don’t want to risk not being able to keep up other expenses like mortgage payments.
Budget for Travel and Entertainment
You’ll also want to think about other costs associated with the holiday season. Do you plan on travelling to visit friends and relatives? Additional costs like gas, travel fare and accommodations can easily drive up expenses and leave you feeling financially strapped. By planning ahead for these costs, you’ll be able to adjust your plans accordingly.
Do you plan on hosting any Christmas get-togethers? These events can make a serious dent in your savings if you don’t plan for all of their associated costs. Develop a budget for how much you plan to spend on things like food. If you feel limited in what you can afford, potlucks are a great way to bring down the cost. Invite your guests to bring items like desserts or appetizers, or ask them to bring any supplies you need. Remember, people are coming to spend time with you, so you shouldn’t feel obligated to overspend for their benefit.
Find a Budget that Works for You
Everyone has differences in what their budget planning will look like based on their income, expenses and holiday plans. Many online budget planning templates can be used when preparing one of your own. These templates can be modified based on your situation and help you keep track of your expenses from month to month.
Mobile apps are another great tool because they make it easier for you to track spending when you’re on the go. This is especially useful when you’re out Christmas shopping and need to stay within a specific budget. A simple check on your phone can keep you from overspending and make the holiday season less stressful.
Budget planning is the first step to being able to control your money rather than having it control you. Contact our licensed insolvency trustees who can help you create a budget that works for your financial situation.