Budgeting for the holidays: How to create a budget you can stick to
The holiday season brings feelings of cheer and excitement. It also marks the start of a stressful time for many – especially when it comes to money. From holiday gifts and decorations to holiday travel and hosting, having a low-cost holiday may seem impossible. These things add up quickly and could leave you feeling depleted in more ways than one at the start of the new year.
Fortunately, this Pacific Prime Dubai article offers advice on budgeting for the holidays so you can make the most of this special season.
How do I create a holiday budget?
A holiday budget is quite similar to a household budget. You have to determine how much you can spend and then allocate that money accordingly. Perhaps one of the most helpful holiday spending tips is to use a spreadsheet, budgeting app, or even a piece of paper to see how much you have to spend for everything you want to buy and fine-tune it from there.
Looking at your holiday expenses early on can help you feel more confident heading into the holiday season. After all, it should be much easier to stick to your spending limits with a budget to refer to.
Determine your spending limit
Any good budget starts with finding out how much you have to spend in total, preferably relying purely on your cash and savings. Have you already been setting money aside for the holidays? You may find you’ve saved enough to help cushion your holiday expenses.
If not, it’s time to think about all the sources of income you can use, such as your holiday bonus or money from your savings that isn’t allocated towards another financial goal. Perhaps you can even set aside some extra money from your monthly budget once your regular expenses are settled.
Decide what you’re going to spend on
With your budget in mind, you can now move on to the next step: figuring out exactly what you’re going to spend that money on. Create a list of things that you want to buy this holiday season, such as gifts, food, decorations, travel, clothing, holiday activities, and charitable giving. Check your list twice to ensure you’ve covered everything. You can even create an “other” category for your budget to keep track of unexpected spending and better prepare for future holiday seasons.
Prioritize your expenses
You may be looking at your list of expenses and wondering how you’re going to afford them all. The reality is that you might not be able to, which is where prioritizing your spending comes in. Go over your list and start numbering the items based on their importance.
For example, if gifts are the most important thing to you this year, then add a “1” next to gifts, and so on. It’s easier to create a new list from there with your items in order of priority – making it clear to see what to buy first (and what you may need to cut out).
Further reading: Holidays remain a priority despite the cost of living crisis in 2022
Estimate your costs
Now comes a crucial step of holiday budgeting: determining how much money you can spend on each item on your list. The trick is to be realistic. You may find you can’t spend as much on all holiday gifts if you’re getting them for more people, or you want to focus on a select few and spend more on them.
Be realistic with your estimates too. It can be helpful to look at your receipts from previous holiday seasons or research the cost of some items you’re looking to buy for a more realistic idea of how much items will cost.
So you know how much you need to spend for each item on your list, but you may be wondering how you’ll fit that into your spending limit. Fret not, it’s normal to have to adjust your numbers after going through the aforementioned steps. It can be helpful to reduce spending on items that aren’t considered top priorities and use the difference to cover higher-priority items instead.
Monitor your purchases
Laying out your holiday budget is a good start, but it takes more than that to maintain it. It’s imperative to monitor your expenses, so you don’t overspend or blow your whole budget in one go. For that reason, some people find it helpful to use a separate bank account to stick within their budget.
Simply put all the money you can spend on the holidays in this account and only use it towards items on your list. Mobile banking apps are especially useful, as you can conveniently check your balance at any time. Budgeting apps are another great alternative to keeping track of your spending as you go.
Get in touch with Pacific Prime Dubai!
Hopefully, the tips above will help you stick to your holiday budget this year and focus more on the happiness surrounding this time of year rather than the stress. Another way to keep stress at bay and prioritize your well-being and health is to secure comprehensive health insurance. With a robust health insurance plan, you can enjoy the peace of mind that comes from knowing you can access quality healthcare whenever you need to – without paying exorbitant medical fees out of pocket.
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