The holidays provide an excellent reason to celebrate. But for some, they can also come with some financial stress. According to the National Retail Federation, even with pandemic-related economic challenges, 2020 holiday sales grew to $789.4 billion, and the average person spent nearly a thousand dollars on holiday-related purchases.
Despite this, other reports show that almost 40% of consumers can’t afford to spend as much on holiday gifts this year. Whether you’re looking to tighten your budget or simply stick to your spending plan, your Liberty Bay experts have holiday budgeting tips to help.
Before you start shopping, it’s wise to make a list of the relevant spending categories:
The specifics of this list will vary based on your unique circumstances, but the result should be a convenient reference tool with your ideal budget. Once you know your spending limits, you can even control how much you spend using Liberty Bay’s CardValet tool. Learn more about CardValet’s transaction controls and alert settings here.
After making your list, you’ll know how much you would ideally spend in total if you could. Next, take another look and decide where you could trim back.
For example, what are your needs and wants? If you have holiday decorations or gift wrap you can reuse, you can reduce your budget for those items. After all, while you might want the fancy gift wrap or trendy decoration, you probably don’t need it. This step will help prevent you from falling victim to the “shopping momentum” effect.
Shopping momentum is the impulse to keep adding items to your cart once you’ve started, and it’s just as powerful online as it is in person. It only takes one purchase for you to start getting click-happy with the “Place Order” button.
Your budget should be customized to your situation to prevent any surprise purchases. However, that doesn’t mean you can’t move money from one category to another as things change!
The most important thing is staying aware of how much you can spend overall, but it helps to be flexible within those limits. For example, if you can get your friends on board with a group gift exchange instead of trading gifts individually, you can spend some more on travel expenses or a nicer gift for a special person.
There are plenty of other ways to make the holidays special while sticking to your overall budget. Keep the big picture in mind as your guideline, but it’s okay to adjust some of the details as you go.
Many retailers are already offering Black Friday, Cyber Monday, and other holiday-related deals to get ahead of the expected shipping craze. Here’s a hint, though: everyday sales are likely to give you the same savings as one-day holiday promotions. Here are a few extra ways to shop smart:
The earlier you begin, the better – but smart shopping can help you find deals even up to the last possible minute.
Some of the most memorable or thoughtful gifts can also be very inexpensive. Not all presents must cost an arm and a leg to be valuable! Think of ways to gift something considerate with sentimental value.
If you have friends or family who recently had children, you could gift them a coupon for a night of free babysitting. If you have a long-distance friend, you could send a beautifully framed photo to let them know how much you miss them. If you have a sibling who has a particular hobby, such as baking, you could buy a small gadget or related supplies to show them you care.
As the National Retail Federation survey showed, most holiday shoppers in 2020 wanted to find “gifts that lifted the spirits of their families and friends and provided a sense of normalcy given the challenging year.” Gifting your time, something handmade, or other personalized gifts is a meaningful way to lift the spirits of your loved ones without a hefty price tag.
Staying organized is the superglue that will help you put all these tips together. Smart, organized budgeting will help you take control of your holiday finances ahead of time and as you go.
Remember that handy list we mentioned in Tip #1? We recommend using it to track your spending. You can write down cost breakdowns after every purchase or review your purchases every few days or weeks, but checking in regularly with your budget will ensure that everything goes according to plan and make adjustments where needed.
Liberty Bay’s free Money Manager solution is an easy way to simplify your finances – not just during the holidays but also all year long. This financial management tool can help you create a budget, track your spending, and more.
We hope these holiday budgeting tips will help you have a healthier relationship with your finances this holiday season. Here at Liberty Bay, we are always looking for ways to help you build and maintain strong financial habits. If you have any questions, feel free to contact us anytime.