Mastering Holiday Spending: Your Ultimate Guide to a Stress-Free Festive Season

The holiday season is a time of joy, celebration, and togetherness. However, it can also be a period of financial stress if not managed properly. Between gifts, decorations, travel, and entertaining, it’s easy to overspend and accumulate new debt. At O1ne Mortgage, we understand the importance of financial well-being, especially during the holidays. That’s why we’ve put together this comprehensive guide to help you navigate holiday spending without breaking the bank. For any mortgage service needs, feel free to call us at 213-732-3074.

1. Reflect on Last Year’s Spending

A great starting point for this year’s holiday budget is to review your spending from last year. Pull up your debit and credit card statements from the previous holiday season. This will give you a clear picture of your spending habits and help you set realistic expectations for this year.

Don’t forget to account for inflation. According to the U.S. Bureau of Labor Statistics, as of July 2024, the price of consumer goods was up 2.9% from the same period last year. This means your holiday shopping might cost a bit more this year.

2. Identify All Holiday Expenses

You can’t create a budget without knowing your expenses. Holiday spending can include:

• Gifts for friends and family, as well as presents for gift exchanges like Secret Santa
• Decorations such as lights, ornaments, a Christmas tree, and lawn décor
• Travel expenses
• Food and entertaining

If you’re self-employed or a freelancer, you may also need to plan for unpaid time off.

3. Set Spending Limits

Once you have a clear understanding of your holiday expenses, set spending limits for each category. Sharing these limits with close friends and family can also be helpful. For example, you might set a $75 limit for family gift-giving or a $30 cap on Secret Santa exchanges. It’s also wise to set financial boundaries for travel, hosting get-togethers, and buying decorations. The goal is to assign a rough dollar amount to each holiday spending category.

4. Plan How to Pay for Holiday Expenses

After setting your spending limits, the next step is to figure out how you’ll cover these expenses. Here are a few options:

• Include expenses in your monthly cash flow: Add your holiday costs to your budget and cover them with your regular monthly income.
• Use savings: If you dip into your savings, make a plan to replenish those funds as soon as possible. For example, if you withdraw $500 for holiday spending, set aside $100 per month to replenish your savings.
• Use a rewards credit card: Your holiday spending could earn you cash back, airline miles, hotel perks, or other rewards. Just be sure to pay off your balance at the end of each billing cycle to avoid interest charges.

5. Find Ways to Save

There are plenty of ways to save money during the holiday season. Here are a few ideas:

• Shop around and compare prices before buying gifts.
• Follow brands on social media and keep an eye out for sales.
• Look for discounts and coupon codes.
• Cancel unused subscriptions and redirect your savings.
• Try a savings challenge in the run-up to the holidays.
• Start meal planning and curb your restaurant visits.

6. Track Your Spending

Keeping track of your spending is crucial for sticking to your budget. One simple way to do this is to keep your holiday shopping list as a note on your phone. Next to each category, put the amount you’re able to spend. For example:

• Mom’s gift: $50
• Holiday travel: $400
• Secret Santa gift: $25
• Decorations: $75

Whenever you make a holiday purchase, deduct that amount from the corresponding total. You can also track your spending with an app or by reviewing your debit and credit card transactions.

7. Prepare for Next Holiday Season

It’s never too early to start saving for the next holiday season. If this season is already underway, look ahead to next year and start saving in January. For example, if your total holiday budget is $1,000, putting aside $100 a month will help you meet your goal by October. You can also allocate a portion of cash windfalls, like side gig income and tax refunds, toward your holiday budget.

The Bottom Line

Taking a long-term view can help you create a strong holiday budget and avoid holiday debt. Just be sure not to neglect your other financial goals, such as paying down high-interest debt and improving your credit score. You can check your FICO® Score and credit report for free with Experian.

At O1ne Mortgage, we believe in empowering our clients with the knowledge and tools they need to achieve financial success. If you have any mortgage service needs, don’t hesitate to call us at 213-732-3074. We’re here to help you make the most of your financial journey, during the holidays and beyond.

By following these tips, you can enjoy a stress-free holiday season without compromising your financial health. Remember, a well-crafted holiday budget is your best defense against overspending. Happy holidays from all of us at O1ne Mortgage!