11.07.2024 By Amy Miller, AFC®

Creating a Holiday Spending & Savings Plan

The holiday season is a time for joy, celebration, and connecting with loved ones—but it’s also a time when many people experience financial stress. Between buying gifts, hosting gatherings, and traveling, it’s easy for holiday spending to spiral out of control. However, with some proactive planning and focus on your long-term financial goals, you can enjoy the season without compromising your financial stability.

 

The foundation of a stress-free holiday season is having a plan that aligns with your financial situation and goals. Using our Holiday Spending and Savings Plan can help keep your spending in check and avoid debt and financial regret in the new year.

Steps to Create Your Holiday Spending and Savings Plan:

  • List All Expenses: Use the worksheet to write down everything you plan to spend money on this holiday season. This includes gifts, decorations, travel, meals, and any extra costs (e.g., wrapping paper or shipping costs for gifts).
  • Prioritize Your Spending: Identify what’s most important to you. For some, it may be giving meaningful gifts, while for others it may be hosting family gatherings. Focus your plan on what brings you and your loved ones the most joy and cut back on less essential areas.
  • Set a Spending Limit: Based on your current financial situation and future goals, determine how much you can reasonably spend this holiday season. Be sure to account for other expenses like bills, debt payments, and savings contributions.

Saver Tip: If you’re unsure where to start, look at last year’s holiday spending as a reference. This will help you identify areas where you may have overspent or need to allocate more.

Align Your Spending with Your Financial Goals

It’s easy to get caught up in the excitement of holiday shopping and overspend, but it’s important to keep your long-term financial goals in mind. Whether you’re saving for an emergency fund, paying off debt, or working toward a down payment on a home, your holiday spending should reflect these priorities.

How to Stay on Track:

  • Divide Your Spending into Categories: Allocate specific amounts for each category—gifts, food, travel, entertainment, etc.—and stick to these limits.
  • Avoid Using Credit Cards: It’s tempting to swipe a credit card when you’re making purchases, but this can lead to holiday debt. Use cash or a debit card to keep your spending in line with your plan. If you do use credit, make sure you have a repayment plan in place to avoid high-interest charges.
  • Plan for Savings: Instead of just spending, consider how you can contribute to your savings during the holidays. For example, set aside a small portion of your budget to save for next year’s holiday season or other financial goals. This can help you maintain a balance between enjoying the present and preparing for the future.

Track Your Spending & Stick to Your Plan

Once your plan is set, it’s crucial to track your spending throughout the holiday season. Use a budgeting app or a simple spreadsheet to monitor where your money is going. This will help you stay accountable and avoid overspending. By staying committed to the plan you’ve set, you can avoid the pitfalls of overspending and start the new year in a stronger financial position.

Remember, the holidays aren't about how much you spend, but about making meaningful memories with the ones you love. With a clear plan in place, you can manage your finances more confidently, enjoy the season guilt-free, and maintain long-term savings goals. Embrace the satisfaction of a financially stress-free holiday by sticking to your plan and focusing on what truly matters.

Plan for Post-Holiday Recovery

The holiday season doesn’t end when the gifts are unwrapped. Post-holiday financial stress is common for those who overspend or forget to plan for January’s bills. By planning for your post-holiday expenses, you can avoid a financial hangover.

Post-Holiday Financial Tips:

  • Set Aside Extra Funds: Allocate a portion of your holiday budget to cover bills and any unexpected expenses that may arise in January. This will give you a cushion to start the new year without financial worry.
  • Use Windfalls Wisely: If you receive holiday bonuses, tax refunds, or gifts of money, use these funds to pay down debt or boost your savings. Check out our 30/40/30 approach to handling windfalls that can help you do the best you can with any additional funds.

Start a Holiday Savings Plan for Next Year

Finally, it’s never too early to start preparing for next year’s holiday season. Set up a dedicated holiday savings account and contribute to it throughout the year. By spreading out the cost, you’ll reduce the financial pressure when the holidays roll around.

How to Build a Holiday Savings Fund:

  • Automate Savings: Set up automatic transfers to a separate account each month or with each paycheck. Even small amounts can add up over time.
  • Use Windfalls or Extra Income: If you receive unexpected income during the year, consider putting a portion of it into your holiday savings fund.

The holidays don’t have to be financially stressful. By creating a realistic holiday spending and savings plan that aligns with your goals, and staying on track, you can enjoy a joyful and debt-free holiday season. America Saves encourages everyone to be intentional with their holiday finances and focus on the moments and memories that matter most.

Happy holidays from America Saves!

By following these tips, you can navigate the holiday season with financial peace of mind, ensuring that your spending aligns with your overall savings goals. For more resources on saving, paying down debt, and growing future wealth, take the America Saves Pledge today – Your future self will Thank you!

 

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