What Makes Up Your Holiday Spending?
Does your holiday spending look like a roasted marshmallow bubbling up and falling into the fire each year?
If you have promised yourself many times over that you will spend less during the holidays only to find that your December budget is leaking cash everywhere today’s post just might help you make a change.
Before you can make a change in your holiday spending you must recognize everything that goes into that number. It’s much like the first step in making a monthly budget.
If you planned a monthly budget but only included rent, utilities, and auto expenses, you would find your money ran out long before the end of the month. The reason is obvious. In our fictional budget, there is no allowance for food or medical or cable, or many other expenses that we all pay every month.
This sounds crazy I know, but it is similar to the way people approach their holiday spending. Take a look at this recent survey for details of just what makes up our holiday spending.
While some of this spending is, of course, on gifts — a survey released this year by Deloitte found that Americans plan to spend on average $426 on gifts for others this year — that’s less than half of their total holiday spending. Indeed, we spend hundreds on non-gift items like holiday decor, entertaining and gifts for ourselves. (Survey results from The National Retail Foundation this year also found high levels of self-gifting: Nearly six in 10 Americans plan to buy gifts for themselves, spending an average $139.61, up 4% from last year and “marking the second-highest level of personal spending in the survey’s 13-year history,” the organization revealed.)
“Most people think only about gifts when they make their holiday shopping budget, but there are many other expenses that get overlooked that can send your spending soaring,” says consumer savings expert Andrea Woroch.
While all that spending adds up, most Americans don’t have a specific budget for holiday spending, surveys show — which probably explains why December spending often gets a bit out of control. Of course, controlling holiday spending is probably best done by making a budget– Market Watch
How Does A Budget Help Control Holiday Spending?
Creating your holiday budget doesn’t have to be complicated.
Just take out your bank statement and credit card bills from the last couple of holiday seasons and look for expenses that related directly to the holidays. Making a comprehensive list of what you have spent in the past and using that to create a list of expected expenses for this season is a great place to start. Last, think through the specific people and events that will be included in your holidays this year and add any expenses that haven’t been a part of holiday seasons before.
So what is the advantage of going to all this effort? Here are five ways that creating a holiday budget can help you control your holiday spending.
You can plan and anticipate your spending.
The first reason is for planning purposes. You want to control your holiday spending to avoid going beyond your budget. When you plan something, you can anticipate what will happen. In this case, you can anticipate how much you need to spend and who will benefit from your expenses. It will allow you to make smart choices when it comes to holiday details like your home decor, gifts, and the meals you will serve.
You can save up for holiday expenses
Once you have planned your holiday spending, you can start saving up for it. Some people probably wait until the last minute to shop because they are waiting for their holiday bonus. This actually makes sense but then again, you can save up for your holiday budget. The earlier you start, the less amount you have to contribute from every paycheck. In case you do have a bonus, this can be spent on a well deserved holiday or better yet, be invested in something that can help you grow it.
You can avoid holiday debt
Probably the most important reason to plan your holiday budget ahead of schedule is to avoid debt. If you do not plan your holiday spending, you won’t be able to save enough money to pay for your expenses. Usually, this will lead you to use your credit card to pay off your holiday shopping. According to an article published on Forbes.com, the interest rate on credit cards is quite high. The average interest is 13.93%. The article explained that if you spent $1,000 and paid only the minimum payment, that can cost you $350 on interest. Store credit cards are even more notorious for their high-interest rates. This is why you need to think about your holiday spending as early as September. The more time you have to prepare, the more you can avoid holiday debt.
You can afford to wait for sale events
Another reason to start early for the holidays is to maximize sale events. You can afford to wait for sale events or you can make purchases during the off peak season. This is a great way for you to save a lot of money when it comes to your holiday decorations and gifts. You can also take advantage of the lower prices when shopping online because you have the time to wait for the shipped gifts to arrive.
You can DIY your gifts
Finally, thinking about your holiday budget early will allow you to decide if you should DIY your gifts. Although this will cost you less and will make your gift more valuable, it will take some time to create. This is especially true if you have a lot of people on your gift giving list. By starting early, you can pace your DIY projects so it will not cram every gift. Here is a video with some DIY gifts that you can do for your loved ones. Some of the ideas are not age or gender sensitive so you can use it as a gift idea for anyone. – National Debt Relief
Do you spend more than you expect during the holidays each year?