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Why Budgeting for the Holiday Season Matters: Balancing Fun and Finances

Many businesses expect you to spend more when special occasions are coming up, which is why a budget is crucial to anchor your spending. Here are six reasons budgeting is vital toward the end of the year. 

1. Avoid Overspending

It’s easy to spend in excess during the holidays — there are sales going on left and right, from markdowns on clothes to buy-one-get-one deals on groceries. Setting a budget is essential to get ahead of your spending. It can also help you stay on track and encourage you to only purchase high-priority items.

A budget helps prevent you from burning unnecessary cash and makes that 30% off a washing machine deal seem less appealing. 

2. Prevent Spending Your Money at Once

scattered bank notes that denote savings

Holidays are the best time to shop, so it’s enticing to spend all the cash you stash away in that envelope all at once. But remember, the best sale days are spread throughout the holiday season. There are Halloween, Black Friday, Cyber Monday, Super Saturday, Christmas and New Year sales. Each day highlights particular items with the best deals. 

For instance, Halloween offers more discounts on clothes if you want to add some pieces to your wardrobe. If you’re eyeing to purchase a TV, you can get excellent deals during November on Black Friday or Cyber Monday. In a nutshell, keeping a budget list prohibits you from spending your finances in one go. 

3. Build Better Spending Habits

Holiday shopping is an annual event that inflates your expenses. When the year-end approaches, you buy gifts for loved ones and decorations for your home. You also allocate a portion for grocery items and food to serve during special occasions.

The price of flour and bread went up 25% and 16%, respectively, from 2021 to 2022, while the cost of seafood, pork ribs and beef dropped. What does this imply for a buyer like you? Well, it indicates an opportunity to save. 

During the holiday season, you might want to try serving seafood like delicious crab meat, shrimp, oysters and fish. Crab-stuffed acorn squash bites and seared scallops on a salad sound delectable on Thanksgiving or Christmas.

Food comprises a large portion of your budget. Without a list, it’s easy to overspend. It’s helpful if you can tailor your menus to include more affordable grocery items during the holidays. 

4. Keep Debt in Check

the wallet of someone who is drowning in debt

Debts can pile as quickly as a kid going down a slide during holidays, especially if your credit cards don’t have a limit. If there’s a specific time when budgeting is crucial — it’s toward the end of the year when expenses come one after another. 

You can steer clear of misusing your credit cards if you set specific spending figures that won’t financially stress you when it’s time to pay. For example, you can restrict gift purchases to $500. With a budget, you can keep debt in check and spend wisely. 

5. Have a Reality Check

Who doesn’t want to give the best Thanksgiving or New Year memories to their families? Since these special occasions only come once a year, you tend to think it’s OK to splurge. However, this will add financial and mental stress at the start of the new year. 

A budget list serves as a reality check of your current financial status and reminds you how much you can spend during the holidays. Writing down your expenses on paper is a useful strategy to ensure you don’t spend money you don’t have. 

6. Set a Good Start for the Year

The best benefit of having a budget is starting the new year without financial worries. A survey found that 35% of consumers took on $1,549 debt to pay for holiday purchases, which 37% of respondents could expect to pay for five months or more. 

Setting the tone for a new year with more than $1,500 in debt doesn’t sound financially reasonable if you could have avoided it. While it’s fun to throw a party, give presents to friends and beautify your home during the holidays, you also sometimes need to think practically. If overspending can land you in debt, consider a simple Thanksgiving celebration with close family members. It will save you from money-related stress and allow you to begin the year without or with fewer financial worries. 

Balance Fun and Finances With a Holiday Budget

Creating a budget is easy. You can find templates online and fill them out yourself. It’s also OK if you prefer the traditional way of listing. What’s more important is you follow it. 

Your budget shouldn’t be frozen or too restrictive. Make room for flexibility so that if an unexpected purchase comes up, you have a cash reserve for it. The holiday season is the best time of the year — both to spend and to have fun. Having a budget balances fun and finances and lets you start the brand new year right.

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