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Updated on Monday, November 24, 2014
This is supposed to be the most wonderful time of the year – and it can be if we’re talking about spending time with friends and family or enjoying the seasonal festivities.
But when it comes to your budget this time of year, things probably aren’t quite as wonderful. Let’s not kid ourselves; the holiday season gets expensive. The cost of hosting fancy dinners, throwing parties, and buying presents for every single person you know adds up, and fast.
If you’re trying to create better money management habits and rein in your spending, you need to know how to get through the holidays without blowing your budget – and without earning yourself a label like “Scrooge” or “Grinch.” Here’s how you can walk that fine line between sticking to your budget and enjoying the season:
1. Create a Spending Plan
Your budget may get you through other months of the year just fine. But in November and December, you’ll likely face additional expenses and higher costs. Prepare ahead of time and arm yourself with a spending plan.
Create your budget now for your holiday spending. List out the additional expenses you’ll have from now until the end of the year. You may need to cut back on your normal discretionary spending to make room for purchasing gifts, buying more alcohol to bring to parties, or accounting for a big grocery bill if you need to help out with holiday meals.
Once you set a spending plan, stick to it. Avoid impulsive purchases when doing your holiday shopping, and don’t pick up any items you didn’t plan for. That means don’t buy items for yourself while you’re out picking up gifts for others.
2. Skip Black Friday (But Consider Cyber Monday, If You Must)
The “deals” you’ll have access to aren’t usually worth getting caught up in the madness, stress, and consumer feeding frenzy that is Black Friday in America. Keep in mind this is a retail holiday created by for-profit companies. It’s not about giving you a deal, and there are several reasons you won’t score the amazing savings you think you will.
Let’s start with the fact that most stores have limited quantities of sale items (and they may or may not disclose that fact in their advertising). You’re unlikely to pick up more than one coveted item on your list. Or any item, if you weren’t waiting in line days before the event started. While you still get the insane footage of people stampeding through stores, many retailers hand out numbered tickets on the hottest items before the rush begins.
So it doesn’t matter if you hurdle over grannies and push little kids out of the way. If they have an entire base camp set up outside Best Buy and you show up after them, they have the golden ticket and you don’t.
And many of the doorbuster deals aren’t on quality products. The sale items aren’t the top-of-the-line, best version of the product. Many manufacturers make items specifically for Black Friday that are cheaper than the versions normally stocked in stores. If you care about quality, you’re better off shopping regular sales throughout the year (or sales that pop up between Thanksgiving and Christmas).
Finally, biggest reason you’re not getting a deal is because your savings may be completely manufactured. Retailers often mark prices up ahead of Black Friday, so they can reduce them and make it look like you scored a great deal. Others will never intend to sell an item at the “full price” at all.
Just because the tag says an item was originally $100 and now it’s on sale for $50 does not mean you saved $50.
If you just have to participate in a designated sale day, wait until Cyber Monday and shop online. Do price comparisons and use promo codes – and have your shopping list beside you as you go. Don’t deviate from it and buy things just because they’re “on sale!”
You’ll save time and stress (and there’s no chance you’ll make the evening news as the crazed individual who got into a fist fight over a children’s toy down at the local WalMart).
And if you created a budget surplus – or spend less than you thought you would when you created your spending plan – Abigail from I Pick Up Pennies suggests transferring that money over into your savings account. Make that money into real savings!
3. Focus on What’s Truly Important
One of my favorite ways to get through the holidays without busting my budget is to keep the focus on what provides real happiness and fulfillment in life: relationships, not material stuff. Don’t obsess over giving and getting things this year. Instead, make it a point to spend quality time with those you care most about in your life.
Get others on board by suggesting get-togethers where gifts aren’t the main purpose of the event. Instead of gift swaps between your friends or you coworkers, suggest getting together for a meal. You can go out or go homemade – either way, the total cost should be less per person than trying to purchase gifts for a group.
Or host a party and encourage guests to contribute in some way. That might mean asking each person to bring a dish or a drink, or bring ingredients for a big cookie bake-off and decorating contest. Make it fun and get creative.
You don’t need the point of all holiday gatherings to show off stuff to impress everyone, or to exchange things that you really don’t need. Focus on the relationships you care about, not stuff.
4. Use Tools to Make the Most of Your Money
Most of us will face some holiday expenses that we just can’t get out of. Maybe some members of your family refuse to give up on the idea of an extravagant gift-giving tradition. Or perhaps your coworkers are dead-set on collecting presents for an office swap or for your boss.
Whatever the reason, make the most of the money you absolutely need to spend by using the tools available to you. You can use Magnify Money’s comparison tools to find the best cash back rewards to help you earn money for the purchases you needed to make anyway.
(And if you’re not sure where to stash your savings from those deals you got on Black Friday or Cyber Monday? Magnify Money can help you find the savings accounts with the highest interest rates, too.)
5. Just Say “No”
If all else fails, remember that there are no holiday laws that say you need to participate in every single event, tradition, party, or meal. Only you know your financial situation, and only you can make the right decisions that will get you through this time of year with your budget intact.
Don’t be afraid to (politely) decline activities or events that you know will stretch your budget. You can only fulfill so many obligations during the holiday season, so prioritize.
Don’t attend the parties and get-togethers you didn’t want to go to in the first place, and don’t go to those that will force you to spend more money than you can afford.
You can make this the most wonderful time of the year both for you and your budget if you shop smart, value cultivating your relationships over receiving more stuff, and remembering that only you know what your finances can handle.