BBB Tips: Five Steps to Create and Keep a Holiday Budget

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By Better Business Bureau

 BBB is urging consumers to create a holiday budget this season! Mapping out your spending in November will help ease the strain of a financial holiday hangover in January. Creating a budget, and being disciplined enough to follow it, is one of the best ways to avoid overspending during the holidays. Here are the steps to creating a holiday budget:

Step One: Consider your Income.

The first step is to measure how much money is coming in.  Add up your monthly salary along with your spouse’s and any child support payments, dividends or interest payments and other sources of income.

Step Two: Add up Regular Monthly Expenses.

Adding up expenses is usually more difficult than determining your income because there are so many more factors to consider. Start with your rent or mortgage, utilities, and credit card payments. Also, factor in other expenses for gas and car maintenance, healthcare and groceries. A full list of monthly expenses to consider is available at www.bbb.org/us/article/tips-on-how-to-develop-a-working-budget-6101

Step Three: Estimate Extra Holiday Expenses

A lot of little purchases have a way of adding up over the Holidays and it’s important to consider all of the expenses of the season including:

·        Gifts - Make an itemized list of everyone you want to buy presents for and estimate how much you’re willing to spend for each. This includes presents for family, friends and coworkers. Also consider the cost for holiday cards and postage.

·        Entertaining - Entertaining is big over the holidays. Think about who you’ll be having over and also budget for any food or beverages you might need to bring to someone else’s party. Also consider the costs for eating out and going to the movies—both popular expenses over the holidays.

·        Decorations - Take stock of what you already own and then consider any additional spending you might need to make for a tree, lights, ornaments, wrapping paper, etc.

·        Travel - If you’re heading out of town for the holidays, consider the cost of travel including any car maintenance or pet boarding if applicable.

·        Charitable Donations - The holidays are a time of giving, so budget in how much you plan on donating to a worthy cause. You can learn more about being a savvy donor from the BBB Wise Giving Alliance at www.bbb.org/charity.

Step Four: Revisit, Evaluate and Revise your Budget along the Way.

Once you’ve added up your income and your expenses, it’s time to compare. If more is going out than coming in, it’s time to go back over your budget and pare down expenses. Consider giving fewer gifts or less expensive ways of entertaining. Last year’s decorations are also probably just fine.

Once you’ve balanced your budget, revisit it frequently over the holidays to make sure you’re sticking to it. You might find that you over estimated in some categories and underestimated in others.

Step Five: Reward Yourself. Work into your budget a small reward that you can earn if you meet your goals. If you don’t meet your goals, you can guess where that money is going instead: Paying off your credit card bill in January.

More advice on saving money over the holidays is available online at www.bbb.org or call 1-800-388-2222.