Five Steps to Create and Keep a Holiday Budget
Unless you’re among a select group of people, sitting down and creating a budget does not sound like very much holiday fun. Nevertheless, in tough economic times, the Better Business Bureau recommends that mapping out your spending in November will help ease the strain of a financial holiday hangover in January.
According to a survey by Consumer Reports, shoppers planned on spending about $699 over the holidays last year, but, in a follow-up survey, admitted to actually spending closer to an average of $811, 16 percent more than planned. Creating a budget, and being disciplined enough to follow it, is one of the best ways to avoid overspending during the holidays.
“While it isn’t the most festive way to spend an evening, sit yourself down with a mug of eggnog and crunch the numbers, because tough economic times mean that you literally can’t afford to spend with abandon,” said Mike Coil, President /CEO. “Building a budget and sticking to it over the holidays will stave off a painful financial holiday hangover.”
Step One: Consider your Income.
The first step is to measure how much money is coming in. Add up your monthly salary along with your spouse’s and any child support payments, dividends or interest payments and other sources of income.
Step Two: Add up regular monthly expenses.
Adding up expenses is usually harder than determining your income because there are so many more factors to consider. Start with your rent or mortgage, utilities and credit card payments. Also factor in other expenses for gas and car maintenance, healthcare and groceries.
Step Three: Estimate Extra Holiday Expenses
A lot of little purchases have a way of adding up over the Holidays and it’s important to consider all of the expenses of the season including:
Step Four: Revisit, evaluate and revise your budget along the way.
Once you’ve added up your income and your expenses, it’s time to compare. If more is going out than coming in, it’s time to go back over your budget and pare down expenses. Consider giving fewer gifts or less expensive ways of entertaining. Last year’s decorations are also probably just fine.
Once you’ve balanced your budget, revisit it frequently over the holidays to make sure you’re sticking to it. You might find that you over estimated in some categories and underestimated in others.
Step Five: Reward yourself. Work into your budget a small reward that you can earn if you meet your goals. If you don’t meet your goals, you can guess where that money is going instead: Paying off your credit card bill in January.
More advice on saving money over the holidays is available online at http://fortwayne.bbb.org/consumer-tips-holiday/