5 Steps You Need to Develop an Effective Holiday Budget

The holiday season is in full swing, and has been since practically September, but now the email alerts for Black Friday deals are cluttering your inbox. The pressure is on to find the perfect gift for everyone on your Christmas list, but how do you accomplish your goal without breaking your bank or paying for your purchases well into next year by running up credit card debt?

The best thing to do is to save money throughout the year to plan for your holiday splurge. Unfortunately, many people do not save for the season, but there is still hope! You can successfully navigate the holiday season without breaking the bank.

The single most important thing that you can do to manage your expenses during the holiday season is to set a budget BEFORE you decide to tackle holiday shopping. This should also include the spending that you plan to do on Black Friday, so you don’t overspend on impulse purchases.

To help you get started, here are the 5 steps that you need to develop an effective holiday budget.

  1. Determine your disposable income. Your disposable income is what is left over after you have paid your fixed, monthly bills and your reoccurring variable bills. An example of a fixed, monthly bill is your rent or mortgage. An example of a reoccurring variable bill is food. You need to buy food every month, but the amount may vary from month to month. Please note, that this is referring to a basic food expense and not food associated with entertainment, as entertainment will fall under disposable income.
  1. Determine your disposable income for the holiday season. This is an extension of the previous step. I separate it because I think it deserves more visibility. Normally, understanding item 1 would be sufficient, but in the holiday season you need to understand that your holiday shopping list is competing with the items that you would normally buy with your disposable income. Be sure to also account for the money that you will spend on gifts, holiday parties, holiday clothes, travel, etc. Take the time to really think through the entertainment piece of the holiday expenses, because that will determine how much money you have left for gift buying.
  1. Identify the people on your gift list. Make a list of all of the people that you need to shop for and then once you’re finished, reassess whether you need to shop for each person. Consider ways to reduce the number of people on your list by suggesting to family and friends that you only shop for the kids and then do a Secret Santa for the adults. Parents and grandparents may be non-negotiable, but consider limiting the number of friends and extended family members who receive gifts.
  1. Develop a budget for each person. Once you determine for whom you are going to shop you need to establish a budget for each person based on your relationship and their desires. The value they will get from the gift is not necessarily correlated to the amount you spend; therefore the budgets do not have to be equal.
  1. Remind yourself that this is not about you, so try to limit shopping for yourself. Although, this is about holiday shopping, let’s be honest, one of the biggest challenges we face is fighting the desire to make purchases for ourselves. This is especially true given the great deals that are available this time of season. When you walk into the store, you may want to chant in your head: “I am going to the store to buy gifts. I will not shop for myself.” Remember, every dollar that you spend on yourself reduces the money available for a person on your list.

Now that you’re armed with the information to develop a budget, I hope that you will take the time to do it. It is a little time consuming in the beginning, but it’s worth it. How will you implement these strategies before you buy?

Aisha Taylor is a #1 Amazon Best Selling Author of the book “5+5 FNPhenomenal Ways to Save $100 This Week Without Killing Your Lifestyle”, and the Founder of FNPhenomenal (Frugal –n- Phenomenal). FNPhenomenal helps women to break the vicious cycle of making money, but not keeping it. FNPhenomenal provides education about money management, empowers women to take control of their lives, develop a healthier relationship with money, and pursue being phenomenal.

Visit Aisha online at www.FNPhenomenal.com

Follow Aisha on Instagram/Twitter: @FNPhenomenal

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Saving your money and budgeting correctly are two of the foundational tasks needed to take control of your finances.  If you need additional support, I invite you to check out my budgeting course and my savings course.
 
 

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