The holidays are a great time of the year, but for many folks, they can be stressful as well.
Between gifts, decorations, holiday gatherings and family events, the stress and expense can be overwhelming. Creating a holiday gift budget that you’ll actually stick with will make things much more enjoyable once life gets back to normal after the holidays.
Make a list of holiday expenses
While this may seem obvious, we very rarely take the time to actually do it.
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Make a list of all your holiday gift expenses, including gift exchanges at work, wrapping paper, gifts for family, teachers and so on. This will give you a basic idea of everything you need to include in your budget.
Even if you’ve set money aside for gifts, you may still feel the pinch if you only plan for family gift giving. Expenses for gift-related spending can add up quickly into the hundreds and even thousands of dollars. So, make a list and check it twice.
Decide on a spending limit
For this step, write out a spending range next to the name of each person on your list.
Making a list will give you a good overview of all the gifts you plan to buy this year. A spending plan will reduce stress and help you plan expenses.
After you have a spending range for each person, tally up the higher end of each range and put it at the top. This is your spending limit. Take this number and plug it into your December budget so you can plan for the expense rather than playing catch-up.
You can also use this number to create a savings plan for next Christmas.
A main reason people don’t stick with their holiday gift budget is they fail to manage expectations.
If you don’t have the money to buy your kids a PlayStation, make sure they understand your limitations. Talk to your family and see if they’d be willing to draw names for the adults and put a spending limit on gifts.
Being open and honest about what you can afford will greatly reduce your stress.
Don’t go into debt trying to buy extravagant gifts for family and friends. Your financial health is much more important than getting your girlfriend the newest iPhone for Christmas.
For some people on your list — like neighbors or teachers — consider making treats such as cookies or candy, instead of buying a gift.
Make a shopping list
Once you have your holiday gift list, it’s time to make a shopping list.
You need to do some research to figure out good gift ideas for the people on your list. Ask your family and friends for suggestions or see if you can find their Amazon gift list.
Giving gifts can be fun when you find the right thing for each person on your list. An easy way to think of gift ideas is to write out three to five areas of interest or hobbies next to each person’s name. This will help you brainstorm gift ideas within your desired price range.
Shop for deals
If you’re looking to get quality gifts on a limited budget, shopping for deals is the best way to get the most bang for your buck.
Many retailers run sales and promotions during the holiday season to draw in shoppers to boost their profits. Subscribe to the email lists for your favorite retailers so you can receive coupons and be the first to know when a sale is going on.
Check out websites such as Groupon and LivingSocial for discounts on local restaurants or services such as a massage or a facial. You can often find great gifts at a significant discount.
In addition, websites such as Ebates give you cash back for clicking through them to your favorite online store.
Before making a purchase, do a quick search for a discount code or look for free shipping.
When you’re ready to wrap your presents, don’t forget to check out dollar stores for gift wrapping essentials and holiday cards.
Track your spending
Track your spending as you shop for everyone on your list.
A simple Excel sheet will help you keep on top of your expenses as you cross each person off your list. Don’t forget to subtract each purchase from your spending limit total.
This will let you know how your budget is doing and help you adjust as needed. Tracking your spending is key when it comes to sticking to your budget.
And it will reduce your holiday stress level as well.
Clint Haynes is a certified financial planning professional and a member of the Financial Planning Association of Greater Kansas City. He is the founder and owner of NextGen Wealth in Kansas City.