Take it from a reformed holiday overspender, sticking to a holiday spending limit is a must to stay on track with your financial goals. There was a certain time in my life where the holidays felt like free reign. With all the sales, not only would I spend on Christmas gifts for others, but I’d also spend on gifts for myself! It felt justified since purchases had to be made to put gifts under the tree. Or, did I just say that to condone my bad spending behavior?
Regardless, those habits are a thing of the past! Now, I’m much more mindful of my holiday spending, I start saving ahead of time for gift-shopping, and I set and stick to a limit! It’s not always easy or fool-proof, but it makes a huge difference in the long run. If you struggle with controlling your holiday spending, look no further! I’m sharing 5 tricks to help you stick to a holiday spending limit.
5 Tricks to Stick to a Holiday Spending Limit
#1 Understand your starting point before setting a limit
Before you set a holiday spending limit, you need to know what you’re working with. Do you already have a savings in place? Are you counting on a Christmas bonus? Think about the income or money you have available to you for holiday spending. That’s your starting point.
Next, you’ll want to review your budget. Are there categories you can reduce so you can allocate more money to your holiday spending? The earlier you run through this exercise, the more planning you can do to make sure you’re sticking to your limits. Check out CGS Podcast Episode #45 – How to Prep Your Budget for the Holidays for more tips!
#2 Make sure your holiday spending limit is realistic
Once you’ve identified your starting point and adjusted your budget, you can start thinking about how much you want to spend on holiday shopping. I recommend making a list of everyone you need to shop for, and give each person their own spending limit.
Once you have the total you’d like to spend, compare it to your budget and any savings already in place for holiday shopping. Will you have enough money to get everyone on your list covered? Are you going to be short for a few gifts? From there, you can work to tweak your individual spending limits, or reduce your budget categories even further.
#3 Take cash for your holiday spending
This step can only be implemented after you’ve identified your spending limit. Once you know a realistic amount you can spend on holiday shopping, take that amount out in cash. Cash is usually much harder for people to part with than swiping a debit card. This automatically makes you more mindful of your spending and how much you still have.
When you are ready to go holiday shopping, leave your cards at home and work with the cash. Make sure you have a shopping list with you when you go. This will ensure you only get what you need, and you have enough just for the items on this list. Check out 6 Parts of a Successful Christmas Shopping List for the things you should keep in mind when creating your list.
#4 Have a backup plan for any overspending
Let’s say you left a credit card in your wallet and ended up using it after you spent all your cash. What’s your next move? Having a back up plan for any overspending can help you course correct quickly. Hopefully, you won’t need to leverage your backup plan. But if you do, it’s great to know you have the next steps to ensure you’re not ending the holidays financially behind.
Your backup plan could include reducing your fun spending and/or other budget categories to make up the difference. It could be pulling from savings to pay your credit cards off. It could be working extra hours to make more money. Whatever it is, just make sure you know what you will do if you end up overspending for the holidays.
#5 Set up your holiday savings account for next year
One of my most highly-recommended sinking funds is Christmas (or Holidays). We know, every year, Christmas comes at the same time. We also know that we spend money for Christmas. Why wouldn’t we start saving for it as soon as we can?! One trick to help you stick to a holiday spending limit is to start saving for the next holiday season a year in advance!
Even if it’s $50/month, set up your holiday savings account for next year. Once the time comes to use that account, you can decide if you’ll need to increase your monthly savings to help you for the following year. You may not save the exact amount you need for holiday spending, but having something ready is better than nothing!
Related: 6 Reasons to Start Saving for the Holidays Now
If I can set and stick to a holiday spending limit, anyone can! These tricks will help you be intentional with your money and spending decisions during the holiday season. That alone can save you so much money! Pay attention to how the holidays go and take notes on anything you can change or improve on for next year’s holiday season!
Do you have a process for saving for the holidays? What about setting and sticking to holiday spending limits? I’d love to hear what works best for you, so drop a comment below to share with the community!
-Raya
The CGS Team
