Staying within budget during Christmas can be the ultimate gift you’ll give yourself. When you avoid getting in debt or even just overspending, you can end the season feeling calm and enter the new year without financial stress.
Here are some things you can do with your money to maintain your peace of mind this season.
1. Set up a sinking fund
A sinking fund is a great way to minimize the effect of a seasonal expense on your wallet. This is the money you set aside for a specific, expected cost like holiday spending.
Instead of using up your bonus to pay for everything at once, you save little by little throughout the year to prepare for the expected surge in expenses by the end of the year.
Set a target amount by adding up your budget for gifts, get-togethers, travel, and decorations. Then, divide the total by the number of months or weeks you have left to save.
This is how much money you need to add to the sinking fund regularly on your chosen schedule. If it’s already late in the year, set aside what you can for now and plan to start saving earlier next year.
2. Stretch your gift budget
When giving gifts, consider shared experiences and thoughtful gestures that can allow you to stretch your money without sacrificing meaning.
You may want to do the following:
- Make group gifting more fun
Gift exchanges with price limits can ease the spending pressure and make gift-giving fair. Even with a set limit, group giving can still be exciting if you’ll turn it into a game.
For example, you can play Christmas-themed bingo, a dice game, or hold a raffle as creative ways to distribute the gifts.
Note that memorable gifts aren’t always the store-bought kind. You may also want to offer your most precious resource, which is time.
You can encourage friends and family to change things up and skip the material gifts this year. Instead, you can plan a potluck or try new experiences or hobbies together.
- Be more intentional
Before giving gifts just for the sake of it, think about what would make a present truly special. The key is to identify your gift-giving values and your recipients’ preferences.
Do you believe it’s the thought that counts, or are you the type to search for the perfect present? Would your loved ones prefer memorable experiences instead of keepsakes, or the other way around?
These factors can be your guide for staying within the gift budget. For example, you can trim your gift list but make each present more personal.
Conversely, you can give more gifts to a larger group but cut back on other spending areas or choose affordable options.
3. Minimize spending pressures
As you plan get-togethers, attend events, and shop for gifts and décor, don’t let the pressure to spend ruin your finances and derail your progress toward money goals.
Here’s how you can stay in control:
- Keep track of your spending to avoid going beyond your set budget.
- Limit your exposure to ads and shopping apps to steer clear of unplanned splurges.
- Prioritize your financial health by allocating money to savings, debt repayment, and investments when your bonus comes.
Wise holiday spending doesn’t mean you have to tone down the festivities. You can still make celebrations meaningful without the stress by planning properly and focusing on what truly matters.
