Even the smartest spenders often overspend their budgets during the holiday season. Gifts, parties, travel, meals, etc. all add up, especially on top of your regular monthly bills. If you find yourself feeling anxious about your finances this time of year, take a deep breath. No matter where you start, there are some concrete things you can do to prevent overspending.
track every dollar
First, start tracking your spending down to the last dollar. Download a budgeting app or use a spreadsheet. The mere act of having to enter and record where your money goes every day will make you more aware of your bad habits. Analyze your recent data to look for small, frequent expenses that you likely won’t remember or care about next month.
Make a list of essential items and useful items
Next, create a holiday gift list and divide people into “must have” and “nice to have” categories. A must-have person should be a close relative or very close friend to whom you feel an obligation. Nice-to-have would like to receive a gift if possible. Be honest with yourself about your priorities and expectations.
Set firm spending limits
Set a limit on how much you can spend on gifts for each essential person, such as a maximum of $50 or a maximum of $75. Explicit endpoint limits make it easier to say “no” to anything that crosses boundaries in your store. If you’re someone you’re happy to receive, set your threshold even lower and only give gifts later when you can afford it.
Try packing some cash
How to Stuff Your Cash “or the Envelope System” helps turn budgeting into a more intuitive and “gamified” experience. There are different physical envelopes for each spending category, and you fill each envelope with the budgeted amount of cash. One category (or payment period). The important thing here is that you can only spend money in certain categories (such as groceries or gifts) from a given envelope. Once the envelope is empty, it remains there until the next paycheck arrives.
Stuffing cash works because it requires you to be more intentional (deciding how much money to allocate to each envelope) and more disciplined (when you run out of envelopes, you don’t want to spend any more money). (You will not be able to enter it.)
keep perspective
If you find yourself getting carried away or seduced by the commercialism of the holiday season, stop and change your perspective. Make a list of the things that are most important to your health, such as family, friends, and doing meaningful things. Of all the material goods you can buy, no one can bring you more lasting joy than these pillars. Don’t waste your money this holiday season, make it worth it. Continue spending in a planned manner while taking in the mood of the season.