Expert Advice That Will Keep You From Blowing Your Budget During the Holidays
Photo: Eva-Katalin/iStock Images by Getty
The season of giving is often synonymous with overspending. You’re probably already stressing out about what to buy for everyone from your parents to your Secret Santa at work. Maybe you’re even wondering how you are going to pay for all the new outfits you’ll need for the myriad holiday parties on your calendar. If you’re not careful, you can make a serious dent in your savings. But it doesn’t have to be that way! With a little planning on your part, the holidays don’t have to break the bank. We asked top financial experts for help. Here’s how to get through the New Year without going broke.
Create a budget just for holiday spending
“Start putting a few dollars a week into a savings account or jar or some holding spot, and when you see a little something that you think a friend or family member may enjoy, you can purchase it and save it for the holiday,” says Clare Dubé, a financial therapist in Madison, CT. Create this fund at the beginning of the year, so you’re not scrambling to replenish it in two or three months’ time. We know it’s late now, but you can take note for next year.
If you need a system that’s a little more structured, use a budgeting app like YNAB to organize your savings and spending. This tool lets you create a category group you can label “holidays” with subcategories for entertainment, clothes, travel, cards, and individual gifts. “Planning and being ready for [the holidays] is half the battle,” says Erin Lowell, YNAB’s education lead. “If you want to go crazy on Black Friday, you can—just plan for that!”
The point is that by being proactive, you can decide ahead of time how much you’ll spend, Lowell explains. “This can reduce impulse purchases because you’re just executing a predetermined plan.” To avoid overspending, simply check the price of the item you want to buy your friend against the amount you designated for her.
Sara Skirboll, shopping and trends expert at RetailMeNot, also has a helpful tip to help you stick to your budget: “Purchase a discount gift card with the amount you intend to spend on holiday gifts and leave your credit card in your wallet.”
Be strategic about your gift-giving
When you’re on a budget, you can’t spend a large amount on everyone that makes it on your gift-giving list. Think in terms of tiers, suggests Skirboll. For example, relatives can be in Tier 1; close friends, Tier 2; and neighbors and coworkers, Tier 3. That keeps things fair and uncomplicated. When it comes to the question of how much per person, Skirboll says, “Spend about as much as you would on a typical night out with them.”
We’re conditioned to think if you’re not spending a lot on gifts, you’re not doing it right. “Take a deep breath and ask yourself, what is the true meaning of the holidays,” suggests Dubé. “Are you buying gifts out of a perceived obligation? Be open with yourself and your finances.”
Think beyond material things
Remember that gifts don’t have to come in the form of store-bought items. Quality time counts, too. Consider talking to your family and friends about not exchanging physical gifts, but instead organizing fun activities you’ll both enjoy (a movie night, museum visit, hiking trip, etc.). Your friends may actually be relieved by this suggestion. It’s also taking a weight off their shoulders.
Similarly, you can use your skills and talents as your gift. If you’re a good photographer, offer to take headshots or a family portrait for a friend, suggests Dubé. Or if you’re a marketing pro, you can set aside some time to help a relative on her startup. “One of the best gifts I ever received was coming home from a speaking engagement and finding my husband and son had converted our den into a home office for me,” says Dubé. “[It] was a true gift of love.”
Find cheap holiday flights
Going home for Christmas or Hanukkah? Aside from gift-giving, holiday travel is another big expense that can cause a lot of end-of-year angst. Booking sites Momondo and Skyscanner are excellent at helping you find cheap flights across numerous OTAs (online travel agencies) and airline sites.
Also super useful are mobile apps that tell you when rates are expected to rise and fall (one to check out: Hopper). While forecasts are never foolproof, they can be surprisingly on point. And don’t forget to sign up for fare alert emails or app notifications from your favorite rate tracker, so you can jump on amazing deals. If you’re traveling to the same place every year, you know when a price is too good to pass up.