The holiday season is now fully upon us, meaning it’s also the time of year for lots of giving and with that spending. While gifting to others and holiday cheer is always a good thing, it’s always important to create and adhere to a holiday budget or spending plan. Doing so will ensure that you avoid putting yourself into a tight financial situation and eliminate some holiday stress. So, our Raleigh CPAs at Carson Thorn, CPA, PLLC have compiled a list of tips on how to create and stick to a holiday budget.
Follow this list of steps to create the perfect holiday budget!
Your first step is to compile a list of all the purchases you will make during the holidays. Your list should be as inclusive as possible, covering things like:
During this step, it is important to consider not just the gifts you will buy, but your entire situation and all potential expenses to create an ideal and effective holiday budget.
This step is rather self-explanatory. Analyze your income, bills, and all other components of your financial situation before determining a safe, well thought out amount that you can spend during the holidays. Set an ideal spending limit, as well as a maximum limit which cannot be exceeded. Although you should obviously aim to not exceed your ideal spending limit, this will give you a little wiggle room in case something unexpected arises.
Now that you’ve made your complete list of expenses and determined your spending limit, distribute your available spending money to the several different categories on your list.
For example, after setting aside money for a plane ticket and new decorations, divvy up the rest of the money in your spending limit to go towards gifts for family and friends. During this step, it is also helpful to go ahead and brainstorm some gift ideas for each individual on your list. That way, you will obtain an estimate for how much money should go towards each person.
After all these steps, it’s time for the more enjoyable part: shopping and spending.
Do some research to find the best deals for the gifts you desire to purchase and create a list of all these items and their subsequent amounts. If necessary, redistribute your spending allotments to accommodate and fit your set budget. It’s important to have this list created before you start purchasing items to avoid the temptation to exceed your set amounts and to save you more money.
So, try not to go holiday shopping until this list is completed otherwise you may find yourself overspending.
While you are shopping, be sure to track the amounts of money you are spending. Each time you make a purchase, subtract it from the remaining amount listed in the particular category.
For example, when buying a gift for your grandmother that costs $15, be sure to subtract that money from the $45 total budget you set aside for her gift in particular. Keep your budget sheet, whether it be physical or digital, with you at all times to make tracking your spending much easier and convenient. This step alone is one of the most important things you can do to ensure that you stick to your budget.
It’s easy to create a holiday budget, but more difficult to actually follow through with not spending more than your allotted amounts. Fortunately, there are a few tips to make adhering to your budget a little easier.
It’s incredibly easy to exceed your spending limits when you use a credit or debit card and subsequently can’t tangibly see your money. Sticking to using only cash will help you to gain a more physical sense of how much money is left within your budget, as well as help you to spend more wisely. A helpful suggestion is to put cash for each of your spending categories in separate envelopes.
For example, have separate envelopes with the subsequent amounts of cash for your grandmother’s gift, dad’s gift, new Christmas décor, and so on.
The holidays are full of good sales, so be sure to take advantage of them. Getting good deals can save you substantial amounts of money, allowing you to spend less than intended and remain within your budget. Although Black Friday has also already passed, that time is also perfect for saving money on holiday gifts, so don’t miss out on those deals as well.
Online shopping in our digital age is an incredibly helpful tool. Use online shopping to compare prices of an item and get the best deal possible. This will save you both time and money. Also, be sure to search for coupon codes or daily deals either online or on an emailing list before making an online purchase.
Would you like assistance with your personal or small business accounting? If so, don’t hesitate to schedule a consultation with our experienced CPAs today. Call our Raleigh accounting firm at 919-420-0092 or complete our online contact form.