This article was last updated on December 19
With another holiday season upon us, it’s not too soon to start planning your gift buying budget. Since last year, the economy has changed, many well-known retailers are no longer in business, and it’s likely that those who still have jobs may not find a holiday bonus in their company stocking. So, it’s even more important this year to set a solid budget, and to stick closely to it.
Where to Begin
You should begin setting your holiday budget by taking a look at what you spent last year. Was your budget on target last holiday season, or did it put you in more debt than you had planned? If your budget was on track, congrats! If not, you will need to do things differently this time around so as not to accumulate even more high interest credit card debt.
Some financial professionals recommend that you spend no more than 1.5 percent of your annual salary on holiday gifts. So, for a person who makes $50,000 per year, setting a holiday gift budget of $750 would be the target amount. However, if you have other more pressing debt that should be paid down, you may want to trim a little off of that $750 figure (consider it your holiday gift)
Consolidating Your Spending
One way to help curb your spending, yet still offer nice gifts, is to combine the recipients of your gifts. For example, you could put together an “entertainment basket” for couples or even entire families that are on your holiday gift list. The basket could include movies or gift cards to rent movies, as well as popcorn and candy to enjoy while they watch the flicks. You could essentially include several people in each basket for far less than you would spend purchasing a separate gift for each person individually.
Another option is to go in with others on purchasing gifts. For example, if you have several siblings, each person could contribute a certain amount in order to buy a nice present for your parents. This will not only help everyone stick to a budget, but often you can purchase a much more meaningful gift for the recipients. For more gift ideas see, Holiday Gift Ideas for Him and Her
Keep Track of Your Spending
As you go along with your shopping and other holiday spending, continue to keep track of what you’ve already spent, as well as what you still have left to purchase. You may even consider keeping a “holiday spending log” in your wallet.
Keep a running total of all purchases, and frequently compare the total to what you have budgeted. If you find that you have gone over your allotted amount, start to scale back as you go forward. You could even trim expenses from categories other than your gift allotment, such as holiday travel or expensive meals out.
Also don’t forget to factor in the costs of going gift shopping, which include parking costs, lunch/dinner while shopping and gift wrapping. These extra costs could easily add a few hundred dollars to your budget.
Curbing Other Holiday Expenses
Remember that purchasing gifts aren’t your only holiday expense. If you have out-of-town family or friends that you plan to visit, you need to carefully plan your travel expenses. Even with all of the cut backs, airlines are notorious for raising air fares as the holiday season approaches. So, if you know you will be flying during the holidays, book your trip early and take advantage of potentially lower fares.
This goes for hotels, too. Often you can get a cheaper rate if you simply book online or ask the reservation agent. With the stiff competition and fewer holiday travelers lately, hotels would much rather rent you a room for a lower price than see you take your business elsewhere.
If you are entertaining at home, planning ahead for your expenses for food and beverages will also help you to save money. Purchasing in bulk from big box stores such as Sams Club or Costco will allow you to stock up on just about everything you need for your holiday parties, and usually at a much lower price than at your local grocery store.