Calculating your seasonal budget and sticking to it
This holiday season, higher prices are still making it challenging to create and stick to a budget for shopping, holiday décor for your home, gatherings, etc. However, these uncertainties mean that planning ahead and knowing your spending limits are more important than ever. The Better Business Bureau of Greater Houston and South Texas recommends the following steps for calculating your seasonal budget and sticking to it.
Calculate your debt.
Before planning gifts and parties, take a look at how much you owe. If you have more debt than you can pay off before the holidays, then you will want to keep spending to a bare minimum. Remember, there are plenty of inexpensive and even free ways to show friends and family how much you love them during the holiday season.
Project your income and expenses.
Next, calculate how much money you will earn this holiday season. Review your income from the past three months to calculate an average monthly income. Now, you know how much you have to work with. Before you start setting aside money for holiday fun, make a list of any regular expenses you need to take care of. These might include your utility bills, groceries, gas, and rent or mortgage payments.
Don’t forget about any annual fees that might come up around the new year like HOA fees. Subtract these necessities from your monthly income. With what’s left over and any savings you’ve set aside for the holidays, decide on how much you can spend on the holidays.
Set up a separate holiday budget.
Next, make a list with holiday expenses you plan to incur. Include all holiday related expenses but divide them into categories, such as travel costs, holiday parties, home decorations, cards, gifts, clothes, professional photos, gift wrap, etc. Add up the cost of each item and subtract it from your holiday budget amount.
If you have left over funds, great! If you are over budget, consider what items you want to prioritize and what items you can modify or cut from you list.
For example, your budget might not allow you to host a 50-guest holiday bash for the whole block, but you may be able to afford an intimate family holiday dinner instead.
Plan for inflation.
Consumer prices are up, which can affect both your gift-giving plans and your daily expenses. Be sure to factor costs into your regular budget for items like groceries and gas.
When working on your holiday budget, it’s important to know that some gifts may cost more than they did last year. Always do a price comparison before you buy a product, and don’t be afraid to scale back on gift giving this year if you need to.
Avoid panic buying. Whatever you do, don’t panic buy. Yes, many items will be in limited supply but there is still a plethora of items you can purchase as gifts. It’s never a good idea to pay more for an item than what it’s worth, just because it’s in short supply. In fact, that’s how many people fall victim to toy scams and counterfeit product scams each year. Take advantage of sales, rewards, and cash-back offers.
Keep track of your spending.
This is one of the most important tips on this list. By tracking your spending, you’ll always know how much you have left to spend, when it is OK to splurge on an item, and when you’re approaching your budget limit.
Tracking your spending will keep you from making unwise purchases on a whim and help you avoid taking on unnecessary debt.
For information, visit www.bbbhouston.org or call 713-868-9500. Leah Napoliello is BBB VP of investigations and public affairs. Send questions to Leah Napoliello, Better Business Bureau, 1333 West Loop South, Suite 1200, Houston, TX 77027, or e-mail lnapoliello@bbbhou.org with address and phone number.