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A Different Degree of Wealth

Smart Spending: Budgeting for the Holidays Without Breaking the Bank

The holiday season brings joy, family gatherings, and often gift-giving. Managing holiday spending thoughtfully can help you enjoy the season without impacting your financial health. Here are some budgeting strategies for the holidays. As always, these are general recommendations. For personalized guidance, feel free to reach out.

1. Set a Realistic Budget

Creating a budget specifically for holiday spending can help manage your finances. Start by deciding on the total amount you’re comfortable spending, then allocate it across all holiday-related expenses: gifts, travel, food, decorations, and activities. The National Retail Federation recently reported that Americans planned to spend an average of $902 on holiday expenses, which may serve as a helpful reference.

Tip: Track your spending as you go and adjust if necessary to stay within your budget.

2. Prioritize and Make a List

Listing out gift recipients and prioritizing expenses helps keep spending manageable. Begin with immediate family, close friends, and essential purchases. After listing these, evaluate if you have room in your budget for additional purchases.

Tip: Small, meaningful gifts often have a big impact. The National Endowment for Financial Education suggests focusing on thoughtful gestures over high price tags.

3. Use Cash for Better Control

Research from Capital One Shopping shows that spending with credit cards can lead to three times higher expenditures than using cash. Setting aside cash for holiday spending is an effective way to avoid going over budget.

Tip: Withdraw only the amount you have budgeted for gifts and other expenses to help reduce impulse purchases.

4. Start Early and Leverage Rewards to Spread Out Costs

Shopping early can help avoid last-minute expenses and spread the spending load over several months. A Deloitte survey found that early shoppers are more likely to avoid debt. Early shopping also allows for comparing prices and waiting for sales.

Tip: Try shopping during Black Friday or Cyber Monday. If you use a credit card with cashback or rewards, consider applying these rewards to planned purchases and paying off the balance immediately.

5. Consider DIY and Low-Cost Gift Alternatives

Handmade gifts or gifts of time are often appreciated and can be budget-friendly. Nearly 62% of Americans surveyed by One Poll indicated they would appreciate thoughtful, low-cost gifts as much as expensive ones.

Tip: If you have a skill like baking or crafting, think about creating a personalized, low-cost gift.

6. Set Boundaries on Holiday Activities

While holiday activities add to the season’s joy, they can also increase costs. Prioritizing activities helps manage these expenses. Low-cost or free gatherings, such as potlucks or at-home movie nights, can still create memorable experiences.

Tip: Organize potlucks or other shared gatherings to help offset food costs.

7. Approach Holiday Loans Cautiously

Holiday loans or buy-now-pay-later plans may seem convenient, but they can lead to post-holiday debt. Bankrate reports an average interest rate of 12.38% on personal loans, depending on credit history.

Tip: Aim to stay within your budget and use cash or debit to help reduce debt accumulation.

8. Plan for Post-Holiday Expenses

Holiday spending doesn’t necessarily end when the season is over. Setting aside a small amount for post-holiday bills and expenses can prevent January’s financial strain.

Tip: Include a cushion in your holiday budget to cover any post-holiday expenses

9. Reflect and Adjust for Next Year

After the season ends, reviewing your budget and identifying any adjustments can help improve planning for future holidays.

Tip: Keep a record of your spending and note areas where you went over budget to make future holiday planning easier.

By planning and budgeting carefully, you can enjoy the holiday season without the stress of overspending. For additional insights, check out Chapter 3 of Wealth on Purpose by Bryan Ballentine.

If you need guidance, give us a call. We’re here to help you achieve a financially healthy holiday season.

Our mailing address is:

Ballentine Capital Advisors
15 Halton Green Way
Greenville, SC 29607

Sources:

Disclosure:

Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.

Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.

This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.

No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.

Advisory services through Ballentine Capital Advisors, Inc.

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