The holiday season often seems to be far in the future, but it's never too early to look ahead and develop a holiday budget and spending strategy.
"Planning is key," says Dawn Barnes, Senior Extension Agent of Family and Consumer Sciences for Virginia Cooperative Extension. "You need to maintain control of your spending rather than letting the holidays take over and dominate your spending and time management."
Follow these suggestions to make the holidays less stressful, more budget-friendly, and the expenses less unexpected when they arrive:
Create an all-inclusive budget
Make a list—and, yes, check it twice—but leave no expense unconsidered. For instance, if you illuminate your home's exterior with holiday lights, consider how the additional power load may increase your electric bill, and factor that into your budget. If you're traveling, account for the cost of gas or airfare, lodging, meals, entertainment and more.
Want to safeguard your spending plan with a budget cushion? Barnes recommends adding an additional $100-200 to your budget.
Get an early start
Establish your budget for this holiday season as soon as possible. Then, track your purchases as you make them. After the holidays, review what you spent and use that to create a holiday budget for next year, Barnes recommends. Put that money in a savings account earmarked for holiday spending.
"If there is less money in your holiday budget than what you planned on, adjust spending a bit," Barnes says. For instance, if you were intending to provide all the food and beverages for a holiday get-together, invite your guests to a potluck instead.
Use credit with caution
Paying with plastic? Barnes recommends deducting the transaction from your checkbook balance right after you make the purchase. That guarantees the money will be there when your credit card bill arrives. "Don't take on any more debt than you can handle," Barnes says.