The holiday season is a time when many families gather together, celebrate over a big meal, and in some cases, exchange gifts. According to Investopedia, the average American in 2020 spent around $880 during the holiday season. On average, $650 was spent on gifts and $230 was spent on holiday meals and décor. To some, that dollar amount seems reasonable, while to others it may be shocking especially if that kind of money was not built into ones budget. Below are some tips on how to build holiday spending into your budget without all of the last minute worry and stress.
How much can you spend?
When purchasing gifts for the people we love or preparing for the big holiday dinner, we spend not realizing until after how much money was spent. Sitting down and thinking about a realistic dollar amount you can afford to spend will help you create a budget specifically for the holidays.
Set an amount per person
Once you have decided what you can afford to budget for the holidays, write out a list of who you plan to buy gifts for, and set a certain amount to spend on each person. Once that is decided, plan for how much you will spend on food or décor. This will help you figure out how much you need to budget.
Create a holiday savings account
Once you have a dollar amount of what you can or want to spend during the holidays, open up a sub-savings account to dedicate especially to the holidays. Start saving right away for the next holiday season. For example, if we use the Investopedia amount of money spent in 2020 of $880, and divide that by the 26 paychecks a year, a biweekly paid person will receive, I know I would need to save $34 per paycheck to achieve the budgeted amount of $880 for the holidays. Now that suggestion may not work for everyone and that’s the cool thing about budgeting for any savings goal, everyone’s way of reaching the goal may be different, but as long as you make your goal realistic and attainable you can work on achieving it.
I personally start saving for the holidays starting with my first paycheck in January. This eliminates so much stress later in the year when the holiday season is approaching. I have a special holiday savings account and deposit money into it every time I get paid. This allows me to spend the money I have saved and can avoid overspending or using credit cards during the holidays.