What the Holidays Can Teach Us About Budgeting for Long-Term Goals
The holidays are a magical time when family and friends gather together and make new memories. Unfortunately, the fun sometimes comes with a hefty price tag that can devastate your bank account if you’re not careful. Putting the time in beforehand to plan out your holiday spending is key to enjoying the moments that matter most. Here’s what you need to know.
Lessons From the Holidays
Holiday expenses come in many different forms. You may be buying gifts, paying for family feasts, or covering the cost of gas while driving to see relatives. With so many ways to spend money, it’s easy to overspend. Here are tips for going into the holidays with a big-picture approach.
Prioritize Your Spending
Prioritizing your spending means figuring out what are your holiday needs versus your wants. While you don’t want to take the fun out of the season by pinching pennies, you also don’t want to ignore your long-term goals. If you hope to save for retirement, pay off your credit card, or store up an emergency fund, make sure your holiday spending doesn’t put your goals in jeopardy.
Set Realistic Goals
Start by setting realistic goals that you can turn into a budget. Decide how much you can spend in total, then calculate how much you’ll be able to put towards each area of the holidays. If possible, plan your budget months in advance so you can get a head start and save up more money for the holidays.
Prepare for Unexpected Expenses
Remember that even the most thought-out plans aren’t perfect. The nature of the holidays often leads to unexpected expenses. You may need to express-ship a gift, buy an expensive plane ticket, or order more food for hungry guests.
It’s always a good idea to have a holiday emergency fund set aside to cover these unplanned situations. However, don’t let having extra money for unexpected costs be an excuse to make impulse buys.
Avoid Impulse Purchases
During the giving season, stores have sales, discounts, and offers that can be hard to pass up. Don’t let the appearance of a good deal lead you into the trap of buying things you don’t need. Every time you think about making an unplanned purchase, give yourself a day to think about it. After a good night’s sleep, you may realize you don’t need that item.
Stick to Your Plan
Long-term financial freedom depends on making the right decisions again and again. Because there are so many temptations during the holidays, revisit your budget to remind yourself to stay on track. Once you develop good habits, it’s easier to avoid spending traps.
Don’t Let Overspending Ruin Your Holidays
Creating a budget and setting goals may sound like a holiday buzz kill, but it will actually bring you more happiness over time. You’ll have less financial stress over the season and can secure your long-term financial future as well. In the end, putting the time in to prepare for the holidays ahead of time will allow you to enjoy them to the fullest.
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