Creating a Realistic Holiday Budget

Along with feelings of joy, warmth, and connection, the holidays can also bring financial stress if you’re not careful. Creating a realistic holiday budget will help you avoid a financial hangover come January.

• Evaluate Your Current Financial Situation. Before you begin your budget, take a look at your income, expenses, savings, and any existing debts. Consider how much disposable income you have after taxes and necessary expenses, and make sure you account for all of your current expenses. If you don’t have a lot of money left at the end of the month, look at ways you can cut back in a few areas to help fund your holiday.
    
• Determine Your Holiday Spending Goals. This exercise will help you have a clearer idea of where your money may go. Beyond buying gifts for family and friends, be sure to include other expenses you may incur, such as hosting holiday gatherings, decorating, traveling, and participating in community events or charity donations.
    
• Set a Total Holiday Budget. Based on your previous steps, determine how much money you have to spend, and how you will allocate it for each of your spending goals. Be honest with yourself about what you can afford without jeopardizing your savings or causing debt. You may need to reevaluate your holiday spending goals to align with the reality of your financial situation.
    
• Monitor Your Spending. Keep track of your expenses against your budget. Use budgeting apps, spreadsheets, or even a simple pen and paper to consistently monitor your expenses. Be sure you track every expense in real time – even one or two forgotten expenditures can wreak havoc on your budget. Make adjustments if you find yourself going over budget in one category.
    
• Stay Mindful and Enjoy. Creating a realistic holiday budget doesn’t have to be a chore. With a bit of planning and mindfulness, you can enjoy the festivities without financial strain. Embrace the true meaning of the season — connection, generosity, and joy — without letting your budget take a back seat.

By following these steps, you’ll be well-prepared to celebrate the holidays in a way that feels both fulfilling and financially responsible. Happy budgeting and happy holidays!