The holidays are generally one of the most stressful times of the year. They come with lots of joy but also lots of expenses that you don’t normally have. For example, there is a list of presents to be bought, often flights across the country, and increased spending on entertainment. For these reasons, it can be incredibly helpful to start your budgeting process well ahead of time.
These are a few of our tips for budgeting for the holidays, as well as some tips to find the best deals.
Set a Plan and Budget
When you decide it’s time to buy a new car (or a similar type of large purchase), you’ll usually spend a few months saving up for it. This is a good practice that can be used for the holidays as well. The easiest way to get organized for holiday spending is to follow these three steps:
- Make a list of everyone for whom you want to get gifts.
- Establish a spending range for each person.
- Start setting money aside for each person a few months in advance so that you’re not scrambling to find hundreds of dollars at the last minute.
Once you have your list (just like Santa), you can cross off names as you’ve saved for them and purchased their gifts. We want to stress the importance of not expanding your holiday budget beyond your means by using credit cards to finance the purchases you cannot afford.
Create Some Side Income to Pay for Gifts
Since you’ll be spending a bit more than normal during the holidays, it can be difficult to stretch your normal budget to fit the increased spending. To compensate, try finding a side hustle in the weeks (or even a couple of months) before the holidays to create some side income. You can then use this side income primarily for holiday spending.
Since most of these positions are just part-time, it should be no problem to quit them after the holiday rush is over. One of our employees temporarily worked at PetSmart last year to earn the extra holiday cash.
Use Credit Card Points on Gifts
Credit card points can compound into quite a lot of rewards over the course of an entire year. Make a point to save them up exclusively for holiday gifts and not spend them on everyday expenses. That way when the holidays come around you can use credit card points to make a big dent out of the expenses.
Really Take Advantage of Deals
Almost every company is trying to win your business during the holidays because they know everyone is spending. As a consumer, waiting until you find the best deals on big-ticket gifts can save you hundreds of dollars. Even though the crowds can get crazy, shopping on big sales days is the way to go:
- Cyber Monday
- Black Friday
- Prime Day
Bonus tip – Amazon is not the only retailer running specials on Prime Day. Online retailers know that there will be more internet traffic on days like this. To add to their bottom line, they run their own promotions to compete as well.
Use Online Price Comparison Tools
It is easy to get caught up in buying an item because it’s a great deal. Often retailers will drive up the starting price weeks before to make the discount look bigger than it is. Retailers use the same tricks as the car salespeople we discussed in last month’s blog. Be wary of shopping online; there is often a better deal out there, and it may not be online.
For those that give monetary gifts to family member and friends, please remember the gifting rules. You can gift up to $15,000 tax free to any one recipient within a year (for 2020). If you are married, you and your spouse can each gift $15,000 to any one recipient within a year.
We hope that you’ve found this article valuable when it comes to learning a few ways to budget for holiday gifts and how you can find the best deals. We’d love to hear your best holiday shopping tricks. You can email them to us at Questions@FSAinvest.com.