While the holidays come with a lot of fun and excitement, they can also be very stressful. Christmas is a season of giving, which also means that it is the season of spending. One of the best things you can do to ensure that your holiday is less stressful is creating a budget and sticking to it. This will help alleviate your stress and ensure that you don't step out of Christmas in debt. Here are 5 tips for managing money over Christmas:
Create a list of the expected holiday expenses
One mistake people make when making a Christmas budget is only considering the gifts instead of creating an all-encompassing expenses list to get a basic idea of the money they will need to get the entire period covered. This, in turn, leaves them wondering why money is so tight during the festivities yet they had only saved up for the gifts.
Therefore, the first thing you should do to manage your spending during this period is to create a holiday expenses list. This should include all the major expenses and nitty gritties like cards, wrapping paper, gift exchanges at work, travelling expenses, decorations and charitable donations.
Decide on the money you want to spend
Once you have a list of the expected holiday expenses, think about how much you can spend without going into debt. The last thing you want to do is get into debt as it will only add interest costs on top of what you spend. When deciding on your spending limit, make sure that you only use money that you had saved up for the holiday, and any extra money that you find in your normal budget.
Also, keep in mind that the budget needs to cover all the expenses over the holiday for gifts, travel, accommodation and food. If possible, create a budget with your family to increase the odds of staying on track. Once you have a limit, divide the money up into different categories. Having a set amount on each category, be it gifts, travel or food helps you find ideas within that price range.
Track your spending
Once you have monies allocated to different categories, begin shopping and take your list and the budget sheet with you. Cancel out items from your shopping list as you purchase and deduct them from your Christmas budget total. This will help you keep track of your budget and inform you whether you need to make adjustments between categories.
Tracking all your spending is crucial to sticking and managing your Christmas budget. Apps provide a great way to track your spending. Since you are probably going to have your smartphone throughout the holiday, put it to good use in managing your money.
Stick to a cash-only system
While it is easy to swipe or tap away your credit or debit card for gifts, gas and online shopping, when dealing with invisible money, it is hard to keep track of how much you are spending. Also, putting your expenses on a credit card makes it easier for you to overspend.
A cash-only system is a great strategy to stick to your budget over the holidays. It provides the perfect way to build a realistic budget and gain insight into your spending. Once you have set your limit, take that money out of your bank and stick to a cash-only system.
Get creative with your gifts
When working on a limited Christmas budget, consider making personalised gifts for everyone on your list rather than splurging on expensive gifts. This can turn out to be a fun project for the family while helping you spend a lot less money over Christmas. Homemade gifts like cookies, candy, fudge or bread are not only delicious but also a thoughtful way of saying “Thank You” to your loved ones.
You can also save money by buying second-hand items on sites like eBay or local thrift stores. Being creative with your gifting will help keep you from spending too much over Christmas and free up cash that you can spend on the coming year.
Being generous over Christmas is a lovely quality. However, giving and spending more than you can afford will only leave you in debt. Get the ball rolling over Christmas with these money management tips and eliminate the new year panic.