The holidays aren’t for breaking the bank

01 Dec 2023

The holiday season, with its festivities and celebrations, often comes with the temptation to overspend, you know you’ve almost been sucked into buying that Champaign advent calendar. But you’ve got budgeting skills (if not check here) and you can use them during the holidays. Here’s our step-by-step guide to creating a budget so gift-giving can be sensible.

Creating a Budget (our recap)

Calculate Fixed Monthly Costs: Start by adding up all your monthly fixed costs, such as rent, subscriptions, utilities, and minimum debt payments. These are the non-negotiable expenses that recur every month. Having a clear picture of these costs will provide a baseline for your budget.

Allocate for Future Financial Goals: Beyond your fixed costs, allocate a portion of your budget towards future financial goals. This could include additional debt payments or contributions to your savings and investments.

Account for Non-Monthly Expenses: Consider non-monthly expenses like annual fees or irregular bills. To incorporate these into your monthly budget, divide the annual cost by 12. This ensures you set aside a monthly amount, to stop any financial surprises when these expenses rear their heads.

Calculate Your Monthly Spending Allowance: Subtract your fixed costs, future financial allocations, and non-monthly expenses from your monthly take-home pay. The remaining amount is your spending cash, we think this should be about 30% of your net pay or your “wants” from the 50/30/20 budget.

PRO TIP: If you’re at the elite level of budgeting you can take how much you would normally spend during the holidays and consider it part of your non-monthly expenses and divide that by 12 so you’re saving a little every month for when the big spending starts!

So now that you’ve figured out your budget, with holiday spending either saved of delegated from your “wants” portion, here are a few tips to help you spend a little more wisely:

Gift Exchanges with Friends and Family: Instead of buying gifts for everyone, suggest a gift exchange for certain friend and family groups. Draw names to determine who you’ll be buying for, making the process more manageable and cost-effective and lots of time it’s more fun too! You’d be surprised how many people are interested in less stressful buying and being able to be creative with only a few gifts.

Set a Maximum Gift Spending Limit: Establish a maximum spending limit for each person on your gift list. This way everyone gets a (probably) thoughtful gift without anyone feeling the need to overspend. Setting a budget-friendly cap can mean getting creative in gift buying or at least capping the amount on a gift card.

Set an age limit for gifts (We don’t mean cut out your granny): The next two tips might be tough, and some might feel a little slighted so consider your audience. Maybe you have 10 nieces and nephews but 6 of them are teenagers or even adults, the older ones could be added to the gift exchange or even taken off the list. The younger kids usually get a kick out of getting toys, but 17-year-old Anthony might just want to sleep in on Christmas morning instead of something material. This way your budget shrinks a little and Anthony gets the peace and quiet that was at the top of his list.

Make your gift-giving list a little smaller: As everyone gets older, lots of the friends and family you’ve always bought for multiply because they just keep having kids! If your gift list has grown over the years, think about reducing the number of children you buy for, your uni roommate’s sister’s nephew could do with just getting a card. Make sure you talk to the parents about your thoughts, so no one gets offended.

This holiday season, embrace the joy of giving without compromising your financial well-being. Get that budget in check and check out your spending habits and gift-giving abilities. Encourage open conversations with your loved ones about starting some different traditions around gifting, you’d be surprised how many people are feeling exactly the same way you are.

Ultimately, the holidays are about creating memories and connecting with the ones you care about, and smart budgeting can take away some of the stress of the holidays. So get out there, have some festive fun and enjoy saving some cash.