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Budgeting for the Holidays

For many families, holiday spending represents a large amount of money. In some cases, credit cards get maxed out, and they spend the following year paying for splurging during the holidays. While it feels great to buy the hottest gifts, host parties, and spend money to see your loved ones, it can be accomplished without blowing up your budget. Keep reading for our best tips on budgeting for the holidays.

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Travel Expenses

Traveling to see family dropped during COVID-19 but is on the way back up. The average travel cost is $260. If that’s a bit much, here are some ways to save on travel costs this year:

  • Book flights and car rentals early
  • Use points from a credit card
  • Consider flying into a nearby airport and driving a little further
  • Fly on the actual holiday for cheaper airfare
  • Get travel insurance – this seems like an added expense upfront, but it could save you money if your flight is canceled or plans change. Check the travel insurance coverage provided by your credit card as well
  • Ask for travel gifts instead of other items to help defray the cost

holiday dinner with family

Hosting Friends and Family at Home

That’s great, but not without its own costs. The average for hosting family and friends at home is $205. Here, too, you can save money with a little planning.

  • Shop sales and the grocery and party stores
  • Consider making it a potluck event and a BYOB (bring your own bottle)
  • Reconsider what you’ll be serving based on the cost of different food items
  • Reuse decorations from last year or create your own. These ice lanterns would cost nothing to make, and they’re gorgeous

Gifts

Gifts are the biggest holiday expense, with an average cost of $487. Between friends, family, and coworkers, it’s not surprising that gifts ring in so high on the expense scale, but you don’t have to toss your budget out of the sleigh. Save on gift expenses this year by:

  • Creating a list of people you’ll buy for
  • Having a firm budget before you start shopping and sticking with it
  • Decide how many gifts you’ll buy for each person on your list
  • Create a gift fund you contribute a small amount to all year long. Setting up automatic transfers for this makes saving much easier, and it’s never too late to start saving
  • Use browser extensions to help find deals when shopping online. For example, we use Honey by PayPal and have earned thousands of points which you can redeem for cash back, gift cards, or PayPal shopping credit. RetailMeNot and CapitalOne also have similar browser extensions

hanging paper star lights

Non-Gift Purchases

Holiday decorations, greeting cards, wrapping paper, and other celebration expenses average $435. Most of these items seem small, so you may not realize the big bite they take out of your budget. To save money on non-gift purchases:

  • Consider an artificial tree that you can reuse year after year – this is better for the environment too
  • Buy wrapping paper, cards, and other items on clearance after the holidays are over so you’ll already have them for the following year. Artificial trees are deeply discounted after the holidays too
  • Shipping expenses can be lessened if you don’t wait until the last minute, so plan ahead and save yourself some money. December 15 is usually the last day for the lowest price on ground shipping

Review Your Holiday Spending

Once the holidays are over, take a look at what you spent and make adjustments for next year

  • Look at each spending category and note what worked and what didn’t. Adjust accordingly
  • If you need to refresh your decorations, send yearly cards, or need more wrapping paper, clearance sales are your best bet for bargains
  • Set up or adjust your holiday savings account so that you contribute from each paycheck
  • Buy presents throughout the year instead of in a rush after Thanksgiving
  • Create travel notifications for deals on where you’ll be traveling to next year. Then, when the price drops to within your budget, book it

Which of these tips did you find most helpful with budgeting for the holidays?

 

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