Budgeting for the Holidays

With the holiday season just around the corner, now is the time to evaluate all your upcoming expenses. Between gifts for loved ones, travel plans and entertaining, the amount you’re spending this time of year can easily escalate out of control. Here are some ways to handle your spending this holiday season to start 2015 on the right foot.

Reevaluate your priorities and make a plan.

It’s become standard practice for many to end the holiday season feeling like they need to spend several weeks (or months) recovering from holiday spending. But why fall into that pattern?

If you’re running into the same problem every year, the solution could be as simple as reevaluating your priorities when it comes to holiday spending. If you know that you always go over budget when you host the annual family get together, consider handing hosting duties over to someone else or doing a potluck style dinner this year. If expensive gifts are dragging you down, set price restrictions on gift exchanges, or consider out-of-the-box homemade gifts that won’t cost you an arm and a leg. Taking a close look at your finances and actively planning for the holidays is the key to avoiding post-holiday debt.

Watch travel costs.

Travel costs can easily eat up your entire holiday budget. In this day and age it’s easy to stay connected, but as families grow, they’re often pulled in different directions. If you’re packing up your kids to visit the grandparents, the cost of plane tickets for your entire family during the holidays can go through the roof. Consider asking your parents to plan a visit to see you instead, to cut down the number of travelers. You might also think about traveling outside of peak travel times if your schedule allows. Or, consider whether road trips or travel by bus or train is an option.

Give wisely, without feeling Scrooge-y.

Watching a loved one’s eyes light up with the perfect present is one of the great gifts of the season. But, before you head out for holiday shopping, consider potential gift ideas for various friends and family and determine how much of your budget you can devote to each person. Start shopping as early in the season as possible, to avoid last-minute impulse buys, and keep an eye on your favorite stores for sales that will save you money.

Another often overlooked expense is shipping. Even if you stick to your budget when it comes to gift giving, any potential savings can easily disappear when you begin shipping packages to out-of-town friends and family. If you can plan far enough ahead, hand off gifts at Thanksgiving, or send them along with other traveling family members. Or, actively look for sites that offer free shipping.

Ultimately, you know your financial situation better than anyone else, but carefully consider any additional spending that will put you over your budget. Think about how long it will take you to pay off the purchase, and if the activity or gift is worth making payments on after the holidays are over. What seems like the perfect gift in the spirit of the season may end up in the back of a closet by March, and you’ll still be paying it off for months to come.

Do you need help with your financial planning? Stop by your local KeyBank branch today!

Leo Palana manages the Mercer Island KeyBank. He can be reached at 206.748.3790 or leonardo_palana@keybank.com