Holidays and Budgets, Hand in Hand
It’s time to start shopping for the holidays, but did you save enough money to purchase all of the gifts and goodies you’d like?
It’s easy to overindulge on more than just food during the holidays, so make sure you watch what you spend! While researching information to make sure my own budget is in check, I found a helpful personal finance test provided by a news station in Pennsylvania. Reporter Janelle Stelson poses questions that test your budgeting knowledge, and there’s also a great summary of what your overall budget allocations should look like:
- Spend 50 percent of your income on necessities including housing, utilities, groceries, transportation, and basic items (clothes, toiletries, etc.)
- Spend 30 percent on extras and upgrades, which include travel, entertainment, cable, and anything that’s considered luxury
- Strive to save or invest 20 percent of your income
Reading Janelle's post is a good reminder of how important it is to learn how to plan a budget and then keep up with that budget over time (even during the holidays!) Holiday spending would fall into the “extras and upgrades” category, but you may have to forego saving for a month or dip into savings if you need a sizeable gift fund. Here are some tips for buying holiday gifts with a budget in mind:
- Set a limit that you’d like to spend on gifts and holiday entertainment from now until the end of the year, and vow to stick to it! Set a limit for each person you plan to shop for or decide upon the maximum amount you can spend on all your gifts combined.
- Consider talking to your family before buying any gifts and suggest that you each pick a name and stick to a pre-determined gift limit. My family opted to go this route this year, and it has saved me a few hundred dollars and a ton of time!
- Browse for gifts online before going to retail stores so you know what you're going to buy and where you can find the best price.
- Buying online is sometimes your cheapest option, and a lot of sites offer free shipping deals right now. Check out coupon sites like retailmenot.com to search for promotion codes before making online purchases.
- Set a dollar limit for unplanned purchases to make sure you don’t get caught up in the holiday spirit and splurge on lots of small items that add up to way more than you wanted to spend. I know I do this all too often during gift giving season!
Do you have any more holiday shopping tips that help you stick to your budget?
By: Gale Bowman
11-17-2009
After graduating from Notre Dame, Gale realized that young professionals need a source of reliable information as they face “real world” challenges. Gale manages WhatCollegeForgot.com and is pursuing an MBA at the University of Chicago Booth School of Business.
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