How to Make a Holiday Budget and Stick to It

How to Make a Holiday Budget and Stick to It
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Why you should care

Because it’s hard to feel good about the holidays if you’re stressed about your bottom line.

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It might look like fun on Instagram, but being a millennial isn’t easy. Popular culture ridicules you for spending too much on avocado toast. Soaring house prices and falling wages may well compel a lifetime of renting. And the notion of “job security” seems a quaint conceit belonging to a bygone era.

As a result, many millennials find themselves with mounting debt at just the time they ought to be building credit. And the holidays make it worse. According to NerdWallet’s 2017 Consumer Holiday Shopping Report, which surveyed more than 2,000 Americans age 18 and over:

A quarter of millennials still haven’t paid off credit card debt incurred during the 2016 holiday season.

Little wonder: The same survey found Americans spend an average of $660 in total on holiday gifts. And it’s not just the fancy-coffee-loving 18- to 34-year-olds: 56 percent of shoppers said they go into debt during this time of year, and 16 percent of Gen Xers still had it hanging over them, compared with 8 percent of baby boomers.

“Pressure to give during the holidays is real,” concedes Matt Schulz, senior industry analyst at Creditcards.com, a credit card comparison site. “But there are things you can do to help.”

We asked the experts for advice on how to spend smarter this year to guarantee a season of good cheer.

Plan for the unexpected

It may feel like time freezes during the holiday period, but the truth is, the unexpected doesn’t go on vacation (even if you’re planning to). A burst pipe, an ailing relative, car trouble – any one of those things can derail your holiday budget.

Lynnette Khalfani-Cox, a financial coach and author of Zero Debt, advises building in a $500 cushion.

“This ’rainy day fund’ is different from emergency savings, which are meant to cover three to six months of living expenses in the event of a job loss,” she says.

Managing gift expectations

Designing wish lists with your kids is a good idea, says Kyle Taylor, founder and CEO of the Penny Hoarder. “Parents can ask their children to design a wish list within a mutually agreed-upon price range,” he says. Share the list with other family members so that the kids might get more of what they asked for.

Children should also understand why you’re budgeting. Los Angeles accountant and financial planner Ara Oghoorian says he makes a point of discussing the importance of saving and budgeting year-round. “The No. 1 rule we teach our kids is to not overspend,” he says, “and that it doesn’t matter how much money you make — if you spend more than you earn, you’ll run out of money.”

Planning your spending

It’s crucial to plan holiday shopping ahead so that you don’t overspend in a last-minute rush or make panic-stricken, spontaneous purchases. Shop for holiday gifts throughout the year — if something is on sale, it’s never too early to start stocking up. If you can’t cut down on gift costs, make cuts elsewhere. In the months leading up to the holidays, “look for ways to cut discretionary expenses, such as eating out or entertainment, and steer those savings toward your holiday spend,” advises Josh Palmer, head of the wealth advisory team for Chase Wealth Management.

Give the gift of experience

Sarah Mock, a lifestyle blogger who offers savings tips, says shareable gifts that keep on giving help save money long into the New Year. “Get a family membership to a museum, or ask the grandparents for a weekend trip to a local attraction,” Mock suggests. “There is excitement in the anticipation, the actual event and then reliving the memories.”

Some experiential gifts can even be free. Taylor suggests: “Bike trips, free movie nights, concerts or local festivals are all things a family can enjoy together without breaking the bank.”