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Holiday Budgeting By Janice Parker

Janice ParkerIt’s the time of year for giving gifts, entertaining, hosting holiday parties – and sadly for many, overspending and financial stress. Setting a realistic holiday budget and making sure to stick to it are the first steps to a more affordable and less stressful season. You don’t want to be paying for the holiday season well after it’s over. Below are some tips to help you remain stress free and within budget.

1. Create A Spending Plan

The best way to start making a holiday budget is to look at your spending during last year’s holiday season. Evaluate your successes and disappointments in your spending. Next, make a list of the holiday purchases and events you plan to spend money on this year. Consider all of your major spending categories like gifts, entertaining, meals, and travel and then estimate how much you can afford to spend in each category. Create a specific spending limit – for each person on your gift list. Many financial planners recommend spending no more than 1.5 percent of annual income on holiday expenses.

2. Be Creative

One great way to save money and impress friends and family is to get creative. Get your creative juices flowing and create a homemade gift, as they are often more meaningful and most recipients truly appreciate your time and effort. Get a gift that will keep on giving such as a cooking class, charity donation in the recipient’s name, purposeful jewelry, seed money for a new business or a 529 College Savings Plan.

3. The Gift of Love

Instead of excessively spending money on each other this year, join together with family members to help those who may be less fortunate. This is my all time favorite as my family and I commit to helping those less fortunate during Thanksgiving and Christmas before we indulge in any festivities of our own. Make plans now to making the holidays special for someone less fortunate than you.

4. Travel Wisely

If you plan on traveling, take some time to determine how much it will cost you. Be sure to include cost of the entire trip such as gas, travel accommodations, entertainment, meals, shopping etc. If you feel you have to borrow or “rob Peter to pay Paul” you likely can’t afford to take the trip.

5. Entertain for Less

Holidays are a wonderful time to entertain, but a little planning and budgeting can help you avoid financial headaches. Share the cost with family and friends to ensure a fun event that won’t tax you financially after everyone’s gone home.