The holidays can be a stressful time of year, from planning trips, visiting family, shopping and hosting. One of the last things you want to deal with on top of all that is spending more money than you thought you would or incurring debt.
That’s why RHN strongly recommends creating a holiday budget to keep your spending on track and setting yourself up for success for the New Year.
If you want to reign in your spending and track it year-over-year, a holiday budget is a fantastic way to do just that.
Why is a budget so important?
A holiday budget can help you see what you actually need to spend this season and plan ahead. Knowing where your limits are can help prevent large credit card bills, and debt you might have to deal with down the road.
The holidays are notorious for causing a debt hangover for many Canadians, so building a budget can help make sure you are spending within your means and helps protect you from financial instability and stress.
You can make a plan and feel comfortable knowing if you stick to it you’ll be able to focus on what actually matters this season—spending quality time with friends and family!
How to build a holiday budget that works for you
The first step to building a budget is to be honest and thorough. Make sure to account for more than just the gifts you plan to buy others.
Make categories in your budget that apply to your plans. Are you travelling to visit family? Hosting people at your home? Consider the costs of food, gas, plane tickets, holiday decor, entertainment and anything else that might apply.
This is also a popular time of year to give a charitable donation. Make sure to build this into your budget, and remember to save your tax receipt! RHN can help you make sure you have your bases covered at tax time.
Remember to account for unexpected expenses
Life can be unpredictable. Make sure you don’t overextend your wallet and leave yourself in the lurch when life throws you a curveball. Building a cushion into your budget is a great way to give yourself peace of mind.
For example, the holidays can be a busy time for vet clinics due to pet owners being distracted by family and friends and there being lots of stuff around for pets to get into! So if you have a mischievous dog or cat, consider putting some money aside for them.
Refer back to your budget every year
Making your budget nice and early gives you time to save some money in advance, and organize plans and gifts before you go out and spend your money. You should also revisit your holiday budget every year to compare what you spent and what you’ll need to spend that year.
If you’re trying to cut back on spending, use a budget as motivation to be smarter about your shopping! For instance, you can give out homemade gifts, find decor at thrift and consignment stores, or declare that your presence is the present! For travelers, maybe you have some points to use, or you can purchase your tickets ahead of time and get a better deal.
Finding ways to save throughout the year will also be helpful. A holiday budget can also serve as a guide to help you save up for the season throughout the year.
Saving money for your holiday plans can make it so you can afford more without going into debt. You might even consider starting a high-yield savings account to pull from every holiday season.
Make sure to stick to your budget!
It’s easy to get carried away this time of year, but resist the urge to stray from your well-thought-out and planned budget.
If you need to communicate budget constraints and spending limits to your family and friends, there’s no shame in that. It is the season of giving, but make sure it’s not to your own detriment.
Remember to spend only what you’re able to, and set yourself up for a healthy financial future. This will be better for you and your family in the long run, so you can keep enjoying a stress-free holiday year after year.
Following the holidays, RHN will be ready to dive into tax season. Contact RHN Chartered Professional Accountants for tailored year-end tax advice.
This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation. Please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.
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