Given the COVID fatigue from last year, most of us are also looking forward to celebrating upcoming marriages, anniversaries, or birthdays with more gusto than usual. In sum, the upcoming holiday season entails increased spending / expenses.
To help take the stress out of the holiday season, consider creating and sticking to a holiday budget. Not only will a holiday spending plan help lessen your stress, but it will also keep you from overspending and potentially racking up debt this holiday season. Learn how to start budgeting for the holidays in order to make the most of it, and lessen the blow to your wallet.
1. Begin with a List of Holiday Expenses
To start saving ahead of the holidays, it helps to create a plan. Begin by making a list of all of your expected holiday expenses. In addition to gifts for friends and loved ones, be sure to take into account holiday food, wrapping paper, traveling expenses, gift exchanges at work, and charitable donations. This will give you a basic idea of things that you will need to pay for over the course of the next few months.
2. Establish a Budget
As the season is all about indulging, sharing and gifting, you have to decide in advance how much you plan to spend. Write a list of every person you need to buy a gift for, including yourself and set a budget. Then, brainstorm ideas on what to buy. Otherwise, your impulses will take over and you will make purchases outside your planned spend.
Also, if you make purchases well in advance, you are less likely to spend out of desperation because you didn’t have time to look around.
3. Determine how much you’ll Need to save for a Vacation
Once you have zeroed in on your destination, you need to calculate your vacation budget. You need to include multiple things in your budget, such as the cost of tickets (up and down), daily accommodation, local transportation, expenses on food, outdoor activities, etc. All these factors play a crucial role in budget calculation.
4. Make a Budget and Importantly Adhere to it
Making a financial budget is probably the important step to begin with. Please spend quality time in making your budget while accounting for all foreseen expenses and keeping aside a certain amount for unforeseen expenses. When creating a budget, please use the tools and resources you find most helpful. Please discuss with your family to derive a percentage of total income that you intend to utilise for travel or large ticket spends. Ensure to get family’s buy-in for the decision and enjoy the spend as a reward for yourself and your family. Having an overall budget is a good way to stop expenses from compromising your other financial goals.
5. Plan-in-Advance but remain flexible
In-case of travel, please ensure you plan your trip in advance. Increasingly, travel websites offer a cancellation window as well. Advance planning will help you to avoid last minute surge pricing for airlines and hotels. With Covid and ongoing uncertainties, remaining flexible always helps. One never knows. With reference to shopping, it may help to activate price drop alerts or keep a lookout for cashback offers on white goods.
6. Start Investing for your Vacation
The next step in vacation finance involves investing in financial instruments. It will help you grow your money and ensure you have the required funds for your vacation. Investing in a mix of market-linked and fixed product instruments will help you accumulate the desired money you need to make your trip memorable. When you choose to invest in a market-linked product, make sure to go for an instrument where the risk of losing capital is less. You can contemplate investing in liquid funds, for that matter. They invest in securities maturing in 91 days, thus bringing down interest rate risk. Also, you can quickly redeem when required.
7. Decide on your Spending Limit
Now that you know where your money is going, determine how much you have available to cover holiday expenses this year. It’s important to take a hard look at your budget and decide how much money you have leftover to spend during the gift-giving season.
When you are considering this amount, be sure that you only use money that you have set aside or extra money that you can find in your budget. It’s important to not plan on spending more than you have saved initially with a plan to pay it off later.
8. Don’t Compromise your Priorities
However, given all the uncertainties around us, please avoid dipping into your emergency funds to fancy one additional day on holiday. It’s extraordinarily necessary to stay financially prudent and keep priorities intact while enjoying the vacation season.
Over the last many months, most people have knowledgeable mental fatigue as a result of COVID and COVID connected varied uncertainties. Even as we are going to be conscious of following COVID norms, we must always even be mindful of following our finances while creating the foremost of the holiday season.