8 Pro Tips on How To Budget Right for the Holidays
Written by
Cynthia Measom
Edited by
Gary Dudak
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Consumers are expected to spend more on holiday shopping this year compared to last, according to a forecast from the Mastercard Economics Institute, which predicts a 3.2% increase overall. Part of this increase could be driven by the Fed’s recent 0.50% rate cut, leading to lower borrowing costs that might encourage consumers to splurge on electronics and more.
Whether you’re planning to buy something big, treat yourself to a lavish Christmas dinner or expand your gift list, budgeting ahead can help you avoid financial woes when the new year rolls around. Take note of these pro tips for budgeting right during the holidays.
Set a Budget Baseline
Andrea Woroch, consumer and money-saving expert at Andrea Woroch, suggested reviewing how much you spent over the last winter holidays by checking your credit card and bank statements from November to December of 2023.
“This will help you determine an appropriate amount to budget for this coming year,” she said. “This is also a good time to think through those expenses to see where you overspent and where or how you could cut back.”
Set a Gifting Game Plan
“Identify who you want to buy gifts for and start jotting down ideas, researching approximate prices of gifts so you can determine if this plan is realistic,” Woroch said. “Apps like Santa’s Bag are also helpful in managing and tracking your gift shopping list as you can enter a budget per person and record how much you’ve actually spent as you pick up each present.”
Establish Gifting Expectations
Woroch said that as you’re setting up your gifting game plan, it’s also a good time to establish gifting expectations with family and friends.
“Discuss setting up gift exchanges where you’re only responsible for one person rather than buying everyone a gift — or perhaps you only focus on the children this year,” she recommended. “Setting these expectations early can help you plan for your holiday expenses better and also save money.”
Start Shopping Early
October offers plenty of early holiday sales.
“Amazon Prime Big Deals Day is slated for Oct. 8 and 9 with big savings on a variety of electronics, small kitchen gadgets, clothing and other household goods,” Woroch said. “Competitor stores will also be rolling out early holiday sales around the same time. Purchasing a few gifts early in the season also helps you manage your cash flow as you spread out purchases over several weeks rather than trying to buy everything at once in December. That’s what causes people to rack up debt since many fail to save — so it’s like an alternative to saving cash.”
Boost Your Income
Woroch explained that the best budgeting hack is to boost it by looking for ways to make extra spending cash for holiday purchases. “There are plenty of lucrative and flexible side hustles you can do from home,” she said. “For example, you can make up to $1,000 a month by pet sitting through Rover, or earn $20 to $50 per hour by virtual tutoring through Varsity Tutors.”
Woroch said other ideas to boost your cash flow are renting your car through Turo or signing up for virtual focus groups via Sago.
Stash Away Free Rewards To Put Toward Holiday Purchases
Woroch suggested signing up for free loyalty programs to earn money back at the store to help you pay for a holiday gift later in the season. She also said you can earn free gift cards by snapping photos of your various shopping receipts using a free rewards app like Fetch.
“You earn points for each receipt you upload which are redeemable for gift cards to Target, Amazon, Walmart, Sephora and many more stores to help pay for those last minute holiday gifts (or give the gift cards as gifts themselves!),” she explained. “This is like getting free gifts!”
Get a New Credit Card Now
Woroch said that there are few reasons why getting a new credit card now can help you budget better for the holidays.
“For one, many cards offer 0% interest on new purchases for around a year or more,” she said. “Second, many offer free cash bonuses when you first sign up and spend a certain amount in the first few months so you could earn free money for holiday purchases, giving your holiday budget a nice boost. Finally, you can earn more rewards for the purchases you’re planning to make over the holidays by opting for a more robust cash-back card.”
Stash Away Small Amounts of Money You Won’t Miss
Woroch suggested tricking yourself into saving by stashing away small amounts of money you won’t miss, such as $5 here or $10 there. She also said that every time you successfully dodge an impulse purchase, you should put the money you almost spent into your holiday savings.
“Finally set up small auto deposits into your savings for just $25 a week,” she added. “Starting now through Christmas means you can save around $225 to spend without worry. Bonus — use a high-yield savings account like Bread Savings so your holiday savings are out of sight and earn some extra money back thanks to higher interest rates. They’re currently offering 5.10% annual percentage yield so your holiday savings will make some extra cash all for free.”
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