With Thanksgiving in the United States this coming week, many of us are beginning to think about the holiday season, including Hanukkah, Christmas, Kwanzaa and New Year’s, and all of the activities that will be happening during that time. Although the season is a time to relax and spend with family and friends, it can also be expensive!

Navigating the holidays prudently takes careful planning and being intentional in managing your finances. Here we share five ways to save and spend wisely during the upcoming festivities.

 

1.  Create a holiday budget

Separate and apart from your normal operating budget to cover your monthly commitments, create a separate allocation for the holiday season. This budget should be realistic and anchored in your situation. Often, there is the urge to splurge during this time of year, without thinking about your current financial circumstances and goals.

To that end, it is crucial that you are clear about where the funds will come from to settle these holiday expenses. All too often, people are liberal with their credit cards during the holiday season, rack up a lot of high-interest debt, if they are lucky, and only finish paying off that debt the following July! Essentially, if it is not properly managed, holiday spending can dig into a deeper financial hole than you are already in, or at the very least, set you back from achieving your financial goals.

 

2.  Develop a spending plan

Once you have an idea of your holiday budget, an important step is to figure out how and on items you plan to spend that budget. We tend to only think of a list when we are about to go shopping on a particular day, but what would be more useful is to outline the spending that you intend to do throughout the season.

This requires some planning and forethought to be able to identify the events and activities that you (and your family) might need to participate in, such as office parties, church events and activities, family dinners, presents, etc. To that end, consider including a calendar with important dates of events, and purchasing that may need to be done for those events. Ultimately, it is about being organised and putting yourself in a position to clearly identify your likely expenses and how much you will be able to spend.

 

3.  Start saving early

Although it is already mid-November, it is strongly recommended, if you have not done so before, to start saving for your holiday spending. To the extent that you can, you may want to cut back on some of your discretionary spending, such as your trips to the coffee shop or beauty salon, or your entertainment budget. Additionally, you may want to apportion allocate a small portion of your end-of-year bonus to cover your holiday expenses.

Having said this, it is hoped that you will not spend all of your end-of-year bonus on the holidays. It may be more prudent to try to be more strategic in how you use that lump sum, such as to augment your emergency fund, towards investment, or to pay off a loan.

 

4.  Start your purchasing early

As the holidays approach, certain items may become scarcer and more expensive with increasing demand. Give yourself access to more choices and cost-effective options by shopping earlier. You may wish to consider buying some extra items when doing your weekly or bi-weekly groceries, instead of waiting just days before Christmas, Thanksgiving or other commemorative occasions to do so.

In gradually buying what you need – including presents – you can alleviate some of the pressure that can be associated with the holiday season. More importantly, you will also be giving yourself time to consider alternatives if certain desired items are not available or are outside your budget.

 

5.  Get crafty

Finally, and following from the previous point, in order to save, consider creating homemade gifts, decorations, and meals or foods that you can make instead of buying. For example, wreaths and ornaments can be quite pricey, but you can be creative with a glue gun and items from the neighbourhood Dollar Store or discount store to make your own decorations.

Similarly with food, instead of buying big-ticket and already-prepared items such as a cooked and dressed ham or turkey, consider making them yourself. Although may take a bit of effort, the money saved could be used for other things during this expensive time of year.

 

 

Image:  Sora Shimazaki (Pexels)