How To Budget For The Holidays

The holidays are upon us which means colder weather and shorter days. But it also the season of great holiday meals, spending time with family and friends, and decorating your house. Soon the airwaves and online will be full of holiday sales—everything from Black Friday deals to stores sales that will extend to the very end of December.

The holidays are a time for celebration and fun, but for some, they can also cause unexpected worry. Last year, the average American added $986 of debt due to gift buying and holiday celebrations. This leaves many people with an unfortunate “Holiday Hangover” at the start of the new year.

So how can you get the most of your holiday without worrying about adding debt? We have a few tips to enjoying your holidays while remaining financially responsible.

Set a Holiday Budget

It’s not uncommon for people to sit down and create a list of gift ideas for family members. It is part of what makes the holiday’s so much fun—giving gifts and surprising loved ones.

But many people go into the holiday buying time without a clear idea of what they can afford to spend on their gift lists. Getting a clear idea of how much you can comfortably spend during the holidays will help make sure it is fun and enjoyable. It will ensure that you are buying what you can afford, and have a good idea of which purchases to put on a credit card.

Try My Finance Tool, available in Online Banking, to track your spending and create budgets!

Pay Attention to Credit Card Spending

Credit cards were the most common form of added holiday debt in 2015. 52% of Americans used a bank credit card to finance their gift buying, while another 30% used in-store credit cards. With the high interest rates of many credit cards, it can take a while to pay any balance off.

Using a credit card for holiday spending is a logical choice, as long as it fits into your holiday budget spending. Using a credit card that has favorable terms for you helps ensure you don’t spend a long time paying off your holiday purchases. Make sure your credit card offers competitive rates, no annual fees, no balance transfer fees, and a grace period on purchases, like the BMI FCI Visa credit card.

Give Gift Cards

Giving a prepaid gift card as a gift sometimes feels less personal. But it allows each person to buy exactly what they want. You don't have to worry about guessing the right size, color, or if the person will like the item you are buying. They can use it however they like, when they like, to buy the exact thing they want. The upside for you is that you also know exactly how much you are spending by choosing the gift card amount, helping you stay inside your budget. BMI FCU has prepaid gift cards (that are also reloadable) available for our members.  

Open a New Account

Opening a second account just for holiday time is a good way to ensure that you stick to your budget. That will ensure you don’t accidently overspend while shopping. Then you will also be able to easily track those expenses separately with online banking access. In fact, the earlier you open a holiday account, the sooner you can begin stashing money aside. The more time you give yourself, the easier it is to build up a nice holiday fund to spend on your loved ones. Stop by and talk to a banker at BMI FCU about opening a holiday club account.

And, don’t forget to have fun! The holidays are a special time, when people reflect on what is really important to them, and enjoy in each other’s happiness. Hopefully our tips for the holidays will help you enjoy them stress free!