Smart Holiday Spending: Budgeting Tips for a Stress-Free Season

CREATE A REALISTIC HOLIDAY BUDGET

Before you buy your first gift or make travel arrangements, establish a clear spending limit to help you stay in control of your finances. A good rule of thumb is to limit your holiday spending to 1.5-2% of your annual income.

For example, if you earn $50,000 per year, that gives you $750-$1,000 for the season. Then, make a list of your expenses and divide your budget into categories.

Common categories include:

• Gifts
• Travel
• Food and entertaining
• Decorations
• Unexpected expenses

Your holiday budget should reflect how much you can comfortably afford. It should leave a cushion for your mortgage or rent, groceries, utilities, and other monthly expenses.

Creating a holiday budget doesn’t have to take a lot of time, and you don’t need an app or spreadsheet. A simple written budget is good enough. What’s important is creating a budget you’ll actually stick with.

MAKE A GIFT PLAN

If you’re wondering how to save money during the holidays, one of the best holiday spending tips is to create a gift plan. Start by making a list of everyone you plan to buy gifts for. Next to each name, set a spending limit based on your budget and your relationship with that person. For example, you might choose to spend more on close family members than on coworkers.

If you need to buy gifts for a large group, consider suggesting a gift exchange, where each person buys just one gift for another person. Discussing spending limits with family members can also help you focus more on enjoying your time together instead of feeling pressured to overspend.

Also, be sure to do your shopping as early as possible. If you wait until the last minute, you may not have enough time to compare prices or take advantage of sales. Stores are also more crowded during the holidays, which can make shopping feel stressful.

If your budget is tight, consider non-traditional gifts. Many people appreciate homemade presents more than store-bought items because of the time and care that went into creating them. They may treasure these gifts for years, or even pass them down to future generations.

GET CREATIVE WITH LOW-COST CELEBRATIONS

Another effective strategy for how to manage holiday expenses is to find affordable ways to spend time with friends and family. With a little creativity, you can have meaningful celebrations that feel just as special as any expensive gathering.

Instead of preparing a holiday meal yourself, consider hosting a potluck dinner where everyone brings a dish. Not only is it more affordable, but it also saves time and reduces stress. You may have more variety, and it also gives your guests a chance to share their favorite recipes.

There are many free or low-cost things you can do after meals. You could drive through neighborhoods to see light displays or have an at-home movie marathon complete with homemade popcorn and hot cocoa. Many communities also offer free holiday concerts, parades, and tree lighting ceremonies.

You can also save on decorations by reusing what you already own or by making new ones. Handmade wreaths, ornaments, or centerpieces are fun, affordable projects that add a personal touch without stretching your budget.

AVOID COMMON HOLIDAY SHOPPING TRAPS

Retailers often use clever marketing tactics to encourage shoppers to spend more than they planned. Recognizing these spending traps can help you avoid them to stay within your budget.

First, be careful with impulse buys, which can cause you to go over budget. Watch out for "limited-time offers” or other special promotions. Although they may seem like great deals, they only make sense if you are planning on buying them anyway.

Store credit cards are something else to be careful with. They allow you to make monthly payments on purchases, which can be tempting if your budget is tight. But they typically have high interest rates that increase the total cost, and missed payments could harm your credit score.

Look for additional costs that can make purchases more expensive. Shipping fees, gift wrapping services, greeting cards, and gift bags can add up quickly, especially when you are buying multiple items. If you are shopping online, look for trusted retailers that offer free shipping. Also, consider wrapping gifts yourself or reusing gift bags from previous years.

PLAN AHEAD FOR NEXT YEAR

The best time to prepare for next year’s holidays is right after this one ends. Start by opening a separate savings account just for holiday expenses. This helps you resist the temptation to dip into those funds for other things. Consider automating transfers from each paycheck to consistently grow your savings throughout the year.

Another way to effortlessly boost your savings is with the Texans Roundup Program. The way it works is simple: Every time you use your Texans debit card, the purchase amount is rounded up to the nearest dollar. The extra change is then transferred to your savings account for the holidays or any other situations you’d like to save for.

Small purchases can lead to big savings over time. For example, if you buy a coffee for $3.45, the total is rounded up to $4.00, and the extra $0.55 is transferred to your savings account. Your balance grows every time you fill up your gas tank, buy groceries, dine out, and take care of other expenses.

Getting started is quick and easy. All you need is a Texans checking account, a Texans savings account, and a debit card. You can easily enroll through Digital Banking to start saving right away.

MAKE THE HOLIDAY SEASON TRULY MEANINGFUL

The most valuable gift you can give isn’t found in stores. It's the time you spend with others. When you have a holiday budget and plan, you can share those moments with friends and family without stressing about money.

Ready to start preparing for the next holiday season? Enroll in the Texans Roundup Program today to start building your holiday fund with your everyday purchases.