How to Plan a Holiday Budget

‘Tis the season… for getting sticker shock every time you get an invite to another holiday event or stand in the checkout at the store.

The holidays bring with them lots of cheer, fun times and reasons to celebrate, but can be challenging for those grieving the loss of a loved one, suffering from anxiety or depression, or those wondering how they are going to make ends meet, let alone pay for all the extras of the holiday season.

Whether your finances are in a good spot or you’re feeling the pinch, keep reading to see what the average American spends during the holiday season, as well as some tips for keeping your financial waistline from expanding this time of year.

Average holiday budget in America

We Americans love to celebrate. From the holiday décor available in stores well before Halloween to debating when it’s acceptable to put up your tree, the holiday season may start on Thanksgiving and end on New Year’s for some (and even longer for others).

Between various work, family and friend gatherings, the expenses of traveling, gifts and food can add up quickly. In 2020, the average American spent $998 on holiday gifts and food.

Make a plan for holiday spending

If holidays bring you joy and you want to make sure you have the finances to cover your expenses, consider the following steps as you prepare.

1. Make a list of holiday “musts.” Maybe it’s three Thanksgiving and five Christmas family gatherings, a visit to two holiday-themed attractions and gifts for 11 family members. Whatever your “cannot celebrate the holidays without these” items include now’s the time to identify them. Be sure to make your list and check it twice!
2. Add in the numbers. Once you’ve identified your musts, move on to listing out the expected expenses for each. (Raise your hand if you knew we couldn’t get through this blog post without helping you build a holiday budget.) It’s best to try to have a separate line for each expense involved to make your budget estimating as accurate as possible. Check out the example below to help you get started.Used for example purposes only. Copy and paste this table into your own document to edit it with details that apply to your holiday expenses.

3. Evaluate if any musts can be removed from this year’s list. You don’t have to say goodbye to a beloved holiday tradition forever, but maybe you need to push pause on it this year to make sure you have enough funds to cover everything on your list.

4. Find more budget-friendly options. While, going all out for everything on your list would be great, if it’s not an option this year, pick one or two things on your list to help reduce expenses. Maybe instead of funding the entire Thanksgiving meal, ask your guests to each bring a dish (create of list of what dishes you need and ask people to sign up for one to ensure you have everything covered).

Now’s the time to start saving for next year’s holiday budget

If you went through the steps above, then you have a great start on knowing what you need to plan for in your 2022 holiday budget. If this year’s list will remain the same for 2022, then no need to make adjustments, otherwise adjust your list to get a better estimate of the holiday budget you’ll need to plan for. Consider setting up a Pick Your Payout or Name Your Savings account to help you cover your holiday budget expenses. You can even set up automatic transfers to help you stay on track with your savings goal. Another option (for this year or next) is to discuss plans with your loved ones. Ask about picking names from a hat rather than everyone buying gifts for everyone. Odds are pretty high that many others will be relieved and appreciative that you suggested it.

Want more tips for managing your finances? Check out our blog posts to learn more about giving gifts without going into debt, establishing a solid budget or building your savings.