How to Budget for the Holidays

How to Budget for the Holidays

Between the family parties, the school vacations, the gift-giving and the ubiquitous twinkle lights, the traditions associated with the holidays may be among the reasons why everyone seems just a little bit friendlier than normal. It is, after all, the most wonderful time of the year, to quote the well-known Christmas carol.

But if you’ve taken a look at prices lately — whether in grocery stores, shopping malls or even your utility bill — conditions aren’t as friendly for your wallet. That’s largely because of inflation. You name the product, it probably costs more today than it did a year ago. In October, for example, the Consumer Price Index rose more than 6% from 12 months earlier, according to the Department of Labor. That’s the largest annual increase in consumer prices in more than 30 years. This may explain why more than 20% of Americans intend to spend less on holiday-related purchases this year (e.g. gifts, decor, clothing, party favors etc.) than they did in 2020, as a poll from Gallup found.

Inflation is a symptom of many different factors, from supply chain bottlenecks to inadequate staffing to higher costs of production. With too much demand chasing after inadequate supply, prices invariably climb.

But don’t let inflation be the Grinch that steals your Christmas cheer. With the proper planning and discipline, you can make this holiday the most budget-friendly of them all. Here are a few tips that can set you up for your success moving forward and into the New Year:

1. Cap the amount you intend to spend
Perhaps the most important component to keeping spending down is by establishing a budget, one where you determine exactly how much you plan on spending and then sticking to it. Last year, for instance, the average American spent around $800 on gifts, according to Gallup polling. Nearly two-thirds of respondents in the survey said they intend to spend right around the same amount this year.

Only you know how much you can reasonably afford. Thus, before you start checking off your kid’s or spouse’s wish list, establish a price point and then don’t go over it. If you spend the same amount as last year and it winds up buying you less — in the form of fewer gifts under the Christmas tree — so be it.

2. Review your spending habits
Everyone has those purchases that they like but don’t necessarily need. You can probably think of a few of your own, whether it’s a subscription to a flavor of the month club, premium channel packages or going out to eat every weekend.

Review your spending habits. Is there anything that you buy that you could do without? If so, cut back on it for the time being. Whether it’s eating less red meat to making more of your own meals, the savings can really add up by scaling back.

3. Download discount-related mobile apps
If you have a smartphone — and just about everyone in the country does — then it’s a good bet that you’re using not just one, but several mobile apps on a regular basis. In fact, the average person spends nearly four hours each day on an app or apps, according to Insider Intelligence.

If a discount or coupon clipping app isn’t one of the apps you regularly use, it’s time to change that. From The Krazy Coupon Lady to CouponCabin to Honey to RetailMeNot, apps like these work by scouring the internet for the lowest prices on the items you’re looking to buy. Several also will compare them to other vendors so you can see which deal is better and more convenient for your needs. Honey, Pricepulse and RetailMeNot also have browser extensions so you can take advantage of their search capabilities when you use your phone or tablet’s regular internet browser, like Safari or Google Chrome.

4. Use cash in lieu of debit or credit
When you’re at the retail register ready to pay for your gifts or groceries this holiday, take a look at your fellow shoppers to see how they’re paying. Odds are you won’t see very many of them paying with cash. There’s a reason for that: swiping or inserting a debit or credit card is a lot easier and more convenient than breaking a $20 or visiting an ATM.

Instead of using plastic to buy, purchase with paper. When you pay in actual dollars, you get a better sense of just how much you’re spending. As a result, you may be more inclined to rein in what you’re paying when you can count it. Plus, if you take out a specific dollar amount, it keeps you more accountable to your budget since you can only spend what you have in your hands.

Much like your time in the service, discipline and planning are key to ensuring your holiday budget reaches success, not excess. And if you’re in need of extra spending money to help with shopping, Omni Financial may be able to assist with a military loan. Contact us today to learn more or apply now.

The information provided in this blog post is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial professional to determine what may be best for your individual needs.  Omni Financial does not endorse, recommend or imply affiliation with the listed companies or organizations.