Getting ready for the holidays can be a lot of fun, but can lead to families overspending; resulting in financial debt and stress long after the holidays have ended. Instead of getting caught by surprise this holiday season, I’m going to share with you 5 steps for creating a holiday budget.
This is the second article in the series, “Holiday Planning on a Budget”. In my first article, “Holiday Budget Planning Tips for Busy Moms”, I talked about the reasons why you should budget for the holidays, but maybe you don’t quite know where to start; so in this article I will giving you the steps for creating a holiday budget.
Your holiday budget takes all of your income and holiday expenses into account, and works independently of your general monthly budget.
Here are my 5 tips for creating a successful holiday budget.
Step #1 List All Expenses
The first tip is to create an organized budget by writing down a complete and realistic list of all of your holiday expenses. You might want to start with a list of all of your spending categories. For example, holiday parties and entertaining, holiday décor, holiday gifts, gift wrap and greeting cards, etc.
Once you have all of your categories outlined then you can go back and list individual expenses. With gifts, list how much you think you’re going to spend on each person.
Your budget can be created in a spreadsheet in Microsoft Excel, or you could create a simple table in Microsoft Word (or similar programs). Creating your budget in an electronic file makes it easier to make changes, and you can print a nice clean copy when required. You’re also more likely to be able to find your holiday budget next year, if it’s filed away in an electronic folder on your computer.
Step #2 Prioritize Expenses
Now that you have your list of expenses, rank them in order of importance. This will help you later if you need to cut anything out of the budget.
Step #3 Brainstorm Opportunities for Additional Income
Think about ways you may be able to increase your income. For example, can you get a part-time job? Can you freelance your expertise? Can you eliminate an expense from your current budget for a few weeks?
Step #4 Make Room for Unplanned Expenses
Create an extra column on your expense list and set aside some money for holiday emergencies, or expenses you hadn’t thought of. If you have a little extra money set aside, then it won’t mess up your budget plan.
Step #5 Eliminate Expenses
After you’ve finished writing down all of your expenses, you may learn that your expenses are way too high for the amount of income coming in. If this happens, assuming you cannot add more to your budget, then you’ll need to make some adjustments. This is where your prioritized list will come in handy. You can take a look at the items on the bottom of the list and cut back there first. Your budget is now complete.
Creating a holiday budget makes smart financial sense! It helps you manage the holiday expense much more effectively so you can spend less time stressing and more time enjoying!