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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 stability, 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, family, and gift exchanges like Secret Santa.
• Decorations: Lights, ornaments, a Christmas tree, and lawn décor.
• Travel: Costs associated with visiting family and friends.
• Food and Entertaining: Meals, parties, and other gatherings.

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 gifts or a $30 cap on Secret Santa exchanges. 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 figuring out how to cover them. Here are a few options:

• Monthly Cash Flow: Include your holiday expenses in your monthly budget and cover them with your regular income.
• Savings: Pull money from your savings as needed, but make a plan to replenish those funds as soon as possible.
• Rewards Credit Card: Use a rewards credit card to earn cash back, airline miles, or other perks. 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 numerous ways to save money during the holiday season:

• Shop Around: Compare prices before making a purchase.
• Follow Brands on Social Media: Keep an eye out for sales and discounts.
• Use Coupons: Look for discount codes and coupons.
• Cancel Unused Subscriptions: Redirect those savings towards holiday expenses.
• Savings Challenges: Participate in savings challenges leading up to the holidays.
• Meal Planning: Plan your meals to reduce 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 a holiday shopping list 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 purchase, deduct that amount from the corresponding total. You can also use budgeting apps or review your debit and credit card transactions to keep track.

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, towards 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. At O1ne Mortgage, we’re here to help you achieve financial stability. For any mortgage service needs, call us at 213-732-3074.

By following these tips, you can enjoy the holiday season without the stress of financial strain. Happy holidays from O1ne Mortgage!