The first step in making a holiday budget is to make a list of all friends and family that you would normally purchase a gift, and then talk with other family members about setting a spending limit on gifts. This will help everyone budget and shop more effectively. Before heading out to the store set a dollar amount that you will spend on each person. Remember holiday sales can be tempting, but once you are in the store stick with your original budget.
You will also want to think about how you pay for your holiday shopping. You are less likely to overspend if you pay with cash, as opposed to using a credit card. Shopping with a credit card is very convenient, but since you cannot easily see how much you are spending, you are more likely to overspend. If you are using cash, once all of your cash is gone, you are finished with your holiday shopping. Spending cash makes you much less likely to overspend. Another option to consider, many stores are now offering layaway plans. If you decide to use a store layaway options, be certain to check their return policy and keep track of all payments.
Realizing that everyone may be watching their budget a little closer this year, it may also be a good time to talk to your family and friends about setting new holiday traditions. Instead of traditional gift giving, consider a “Santa Swap,” where you buy a gift for one person in the group instead of everyone. In many families, people enjoy spending time together more than they do the actual gift received. You may consider a nice dinner out where each person pays for their own meal. Also, instead of one family member being responsible for the traditional holiday meal, consider a pot-luck so that everyone contributes to the expenses.
Source: Jennifer Hunter, Extension Specialist for Family Finance, University of Kentucky, College of Agriculture