Budget the Holidays in 5 Steps

The not-so-happy holiday truth is that millions of Americans break their budgets, recklessly overspending on gifts, festive foods, decorations, travel, and parties. Add to the problem a significantly depressed economy that shows little sign of improvement in the near future, and you have America’s current conundrum. It’s important to keep in mind that the joy of family and the holidays comes primarily from your relationships, with gift-giving as icing on the cake. Here are some ideas for keeping that gift-giving holiday spirit alive without going into consumer cardiac arrest!

1. Create an Expense Plan

Get the big picture on your holiday budget. This includes everything from travel expenses to gift buying to grocery shopping for those holiday recipes you plan to cook. After deciding how much you can squeeze out of your bank account for the holidays, allotting specific dollar amounts to all of your holiday purchases will keep things in check. Following this budget is imperative! Without a spending guideline, most people will just keep spending. If you’re going to spend the time hashing out your finances and divvying dollars to specific destinations, your time is only well spent if you follow through with your budget agenda.

2. Track Your Cash

All the budgeting in the world will do no good if you don’t stick to it. Keeping all of your receipts and tallying them up at the end of each day is a way to stay on top of your financial projections. Bear in mind, too, that gift-wrapping and any extras you include with your gifts will certainly add up and should be budgeted. Often, it’s the little extras that tip your budget into the red.

3. Shop Ahead

The more time you have before gift giving, the more you will be able to shop around for the best deal. Stores often raise their prices during the holidays, so get in there as early as possible for the best deals. The Internet can be a great place to find the best deals on sites like eBay and Overstock, but you will need to factor in the time it takes to ship the items to you. Many people wait until the last minute for holiday shopping, which puts them into a panic purchasing mode, overspending left and right to make up for lost time. Earlier shopping sprees will also alleviate the stress and pressure of holiday expectations as time runs short, allowing you to focus on other holiday responsibilities as they arise, like all that cooking!

4. Tap Into Your Creativity

Take to heart the adage “It’s the thought that counts,” and focus on thoughtful gifts rather than flashy expensive ones that may look pretty but have no heartfelt meaning behind them. Things like making a CD of music that you know someone will love—or baking a few dozen of their favorite cookies—provides a special loving touch without breaking the bank. Something like creating a coupon book made out of personal favors such as “one twenty minute massage” or “one errand you don’t want to deal with,” is a cute and free way to give your loved one the best gift of all—your time and energy. If you are skilled at making things, your “one of a kind” handcrafted gifts are beautiful expressions of love.

5. Cash and Carry

Bringing only cash to the store will keep you within your budget — you can’t spend what you don’t have. The less you put on credit cards, the better, in order to avoid fees that you may still be paying off months later. If you insist on using credit this year, choose only one or two cards with low interest rates, and make a firm payoff plan that you will strictly follow in the months to come. It’s a well-known fact that after all the fees card companies charge, you can pay two to three times as much for the item than its ticket price.

What are your favorite ways to do the holidays on a reasonable budget?