7 Ways Retirees Can Set a Holiday Budget Now and Stick To It

The holidays come around only once a year, but budgeting for them should begin early — especially if you want to stay within a realistic spending limit. This is particularly true for retirees on fixed incomes. Setting a holiday budget you can stick to requires research, patience and a willingness to draw the line once you have hit your spending limit.

With Thanksgiving only a couple months away, now’s a good time to put together a holiday budget you can live with. Here are seven ways retirees can set a holiday budget and stick to it.

Looking back on how much you spent for the holidays in the past can give you a good indication of what you should plan to spend this year. Check out bank and credit card statements from previous holiday seasons. Identify expenses that went straight toward the holidays, and consider how they might need to change this year.

If your current living budget is tight, then you probably don’t have much wiggle room for holiday spending. Go over all income sources — including Social Security payments, retirement fund withdrawals and outside income. Review how much discretionary spending your budget allows for the holidays.

Once you’ve determined how much you can afford to spend, set a budget that falls within that dollar amount — then make a commitment to stay within the limit. Setting realistic boundaries is essential to sticking to your budget.

This should be a pretty straightforward task for retirees, who have built up many years of experience with holiday spending. Here are some common expenses:

• Gifts for friends and family
• Travel
• Food and entertaining
• Holiday decorations such as lights, ornaments, a Christmas tree and outdoor décor

Not every holiday is the same. Some years you might agree to host events, while in others you might be asked to travel to someone else’s house. If you can’t afford to travel this year, then let your loved ones know ahead of time. They might decide to come see you instead. If you’re hosting this year and are on a tight budget, make it a pot luck affair to keep your own food and drink costs low.

Using cash rather than credit accounts to pay for your holiday expenses eliminates the risk that you’ll be hit with interest charges after the holidays are over. Paying with cash also ensures you only spend money that you actually have available right now.

The only way to guarantee that you’ll stick to your budget is to track each of your holiday expenses the moment you spend the money. Whether you use a spending app or pencil and paper, this should be a priority during the holidays.