Smart Budgeting Tips for the Holidays

3 MIN. READ

Key takeaways: 

 

• Many Americans tend to overspend during the holidays, only to end up with a high credit card bill in January.
• We’re here to share some smart budgeting tips for the holidays so you stay in control of your spending.
• Power Financial Credit Union also has some great banking tools, like savings accounts and club accounts, to help you save for the holidays.

The holidays are just around the corner. Is your budget ready?

It’s easy to forget about budgeting among the excitement, but your holiday spending can put a serious dent into your finances if you’re not careful with gifts, food, travel, and other expenses.

Here are a few tips for celebrating without breaking the bank.
 

Set a Realistic Holiday Budget First

You’d be surprised how many people approach the holidays without really knowing how much they can spend on the end-of-year celebrations.

To get ahead, simply review your finances and determine how much you can afford to spend. You can go further by breaking down your budget into different categories, like gifts, travel, party favors, food, and decorations.
 

Holiday Budgeting Tips for Gifts

Gifts are a common cause of overspending during the holidays. It’s easy to get swept away by Black Friday deals and last-minute shopping sprees.

To avoid overspending: 
 

• Set a total budget for gifts and divide it among the recipients.
• Shop early to take advantage of deals and sales.
• Consider budget-friendly options, such as group gifts, regifting, or DIY gifts.

Remember, it’s the thought that counts. A heartfelt gift with a note can show you care without breaking the bank.

Avoid the Holiday Credit Card Trap

Did you know that Americans spend over $900 on average for Christmas? For many, that spending goes straight to a credit card.

It can be tempting to buy gifts now and deal with the credit card bill later, but it’s a surefire way to derail your finances for the months to come.

Instead of swiping your credit card, pay for holiday-related expenses with a debit or prepaid card to control spending. If you use a credit card, set spending limits and pay off your holiday debt fast.
 

Try a Holiday Savings Challenge

Sticking to a budget can be a fun challenge. You can do a spending cap with your family: Agree on an amount you can spend over the holidays, and review your spending in early January to see if you were able to stick to your budget, and who was the best at saving.

For a stress-free holiday season, try saving even earlier:
 

• You can start a year-round savings challenge for the next holiday season. Set up automated transfers to send $75 a month into a savings account every month, and you’ll have $900 for gifts, food, and holiday travel at the end of the year.
• Think about opening a Holiday club account. These accounts enable you to save throughout the year and withdraw your funds in the fall. 

Having a dedicated account you can use to save for the holidays gives you more visibility over your finances. By earmarking this money for the holidays, you can avoid spending it on something else. It’s also easier to prioritize with a dedicated holiday savings account: For instance, you could save up for an emergency fund first, a car repair fund second, and a holiday fund third.
 

How PFCU Can Help You Stay on Track This Holiday Season

At Power Financial Credit Union, our goal is to provide our members with banking solutions that support financial success.

We’re here to help with smart budgeting during the holiday season. We offer savings accounts with automated transfers and competitive dividends, as well as club savings accounts. These tools help maximize your savings and provide you with more visibility over your money and your holiday budget.

Contact us for personalized banking and budgeting advice during the holiday season, or visit one of our South Florida branches to learn more about becoming a member.

FAQs

What are some good ideas for budget-friendly Christmas gifts? 

You can show people you care without overspending by getting them something small but thoughtful. Homemade, DIY, upcycled, and recycled gifts are also great ways to save.
 

How much should I spend on the holidays?  

It’s common for Americans to spend about $900 per person. The key is to find a budget that works for you and your finances. You can have a great holiday season and celebrate in a way that is meaningful to you and your family without spending anywhere near $900.
 

How can I budget better for the holidays? 

Start by making a list of the different things you plan to spend money on. This can be gifts, food, decorations, travel-related expenses, and more. Then, go over your income and usual expenses. This should give you a better idea of how much you can spend without derailing your budget.