How to Create a Holiday Budget

The holidays come around every year, yet many of us still get caught off guard by the costs and extra expenses that come with the holiday season. One simple way to avoid, or at least minimize, the stress of holiday spending is to create a holiday budget. 

In this article, we’ll show you how to make a holiday budget that feels realistic and lets you enjoy the holidays without worrying about finances. 

At Arkansas Federal Credit Union, we believe your time and attention should be spent with your family during the holidays, not stressing about your finances. Visit your local branch or visit our website to learn more about how we can help support you through this holiday season. 

Review Last Year’s Spending 

Before setting this year’s holiday budget, start by reviewing how much you spent last year. We know looking back can feel a little overwhelming and stressful, but it’s an important step when budgeting for the holidays. Understanding your past spending gives you a realistic idea of what you might spend this year and helps you plan more confidently.

Take a look at your credit card statements and bank accounts from November and December to see where your money went. Pay attention to categories where you may have spent more than expected. For example, if you noticed a lot of last-minute shipping costs, try shopping earlier this season to avoid paying extra for expedited delivery. These categories show you where you have opportunities to save this year! 

Once you have a sense of last year’s holiday finances, you can start outlining your budget for this year. 

Create a List of All Holiday Expenses

Now that you’ve gotten a sense for last year’s holiday finances, you’ll want to get clear on everything you need to purchase for this year. Holiday budgeting often feels stressful because it’s not just about budgeting for gifts. There are many other expenses that come with the holidays, and taking time to list everything you’ll need helps you stay organized and avoid unexpected costs. 

Use your past spending as a guide when creating your list. If you’re not sure where to start, here are some common holiday budgeting categories to consider:

• Gifts for family, friends, coworkers, neighbors, teachers, etc. 
• Holiday decorations and gift wrap
• Food for holiday meals and gatherings
• Travel expenses like gas, flights, and hotels 
• Holiday cards and postage 

One of our best holiday budgeting tips is to include a category for unexpected expenses. This way, if something comes up, you’ll already have the money set aside in your holiday budget and won’t have to stress about covering it later.

Decide How Much You Want to Spend 

The next step is deciding how much you want to spend overall. Start by reviewing your current income, expenses, and savings to find an amount that feels comfortable. Once you have that number, break it down by assigning a dollar amount to each of the categories you listed earlier. 

For example, if your total holiday budget is $1,000, your budget might look like this:

• Gifts: $500
• Travel: $150
• Food: $100
• Decorations and Gift Wrap: $150
• Unexpected Expenses: $100

Budgeting for the holidays can feel stressful, especially if your budget is lower than what you need and there isn’t much time before the holiday season. If that happens, here are a few options to consider: 

• Have open conversations with your friends and family about gift expectations
• Find ways to bring in some extra income to help with your Christmas budget planning
• Consider low-cost financing options like a low-rate credit card or personal loan

If your budget is below what you need, but you have time before the holiday season, your holiday budget can help you create a savings plan that will help you get there. 

Save Money For The Holidays

Once you know your total holiday budget, break it down into smaller, manageable amounts. Divide your total by the number of weeks you have before you plan to start shopping. For example, if your total holiday budget is $1,000 and you have 10 weeks until the holidays, you can set aside $100 each week.

The earlier you start, the easier it will be to stay on track. If it’s already late in the season, don’t worry, just use what you learn this year to start saving earlier next time.

One of our favorite holiday budgeting tips for families is to open a separate savings account just for holiday spending. Keeping this money separate makes it less tempting to use those savings for other expenses throughout the year. You can even set up automatic transfers, allowing your savings to grow without requiring any action on your part. 

If you plan on using financing options, consider how you will pay off the balance after the holidays. Creating a plan now can make the repayment process easier and less stressful in the new year. 

Monitor Holiday Spending & Create Safeguards

Budgeting for the holidays is great, but it’s only helpful if you stick to it. One of the best ways to stay on track is to monitor your spending. You can use Arkansas Federal’s  My Cards tool in Digital Banking to easily track your purchases and see how your spending compares to your budget. 

If you tend to overspend, you may want to consider paying for your holiday purchases with cash or a debit card linked to an Arkansas Federal Checking Account. This helps you stay within your budget by limiting spending to the funds available in those accounts.

Tracking your spending is an important part of budgeting for Christmas. It helps you stick to your budget, giving you peace of mind during the holidays.

Make Your Money Go Farther with Rewards

Even if you’re staying within your holiday budget, it’s always helpful to find ways to make your money go further. Some of the best ways to save during the holidays include shopping early, using coupons, and setting price alerts to make sure you’re getting the best deal.

Another way to get the most out of your holiday spending is to use a cash-back credit card, like Arkansas Federal’s 2% Cash Back card. That way, even when you pay full price for an item, you still earn 2% back on your purchases. Finding small ways to save or get rewards can add up quickly and make a big difference in your holiday budget.

Create a Holiday Budget with Arkansas Federal

Holiday spending can be stressful, and it’s easy to end up worrying more about bills than enjoying time with family and friends. Arkansas Federal is here to help. 

Whether you want to set up a savings account for holiday expenses, use My Cards and Credit IQ—our free credit-score monitoring tool—to stay on track, or use a low-rate credit card or personal loan for financing, we have options to make your holiday season easier.

Contact us today or visit your local branch to build a holiday budget that works for you.