7 min read

How to Plan Your Personal Budget for the Holidays

Starting Business
Expert advice and insight on starting, operating, and growing your business
holiday budgeting piggy bank

Good heavens! The holidays are very much with us. For most people, this is a time to forget about work, spend time with family, visit long lost buddies, give and receive gifts, say hello to Santa and do all the things a busy 9 to 5, Monday to Friday schedule keeps you away from. Most essentially, it is a time to spend money.

In truth, money is the biggest enabler of a fulfilling and memorable holiday. With sizeable junks of cash in the bank, you can cure your wanderlust and have all the holiday fun without worrying about being broke at the turn of the New Year. But, you see, money is a limited resource. The vast majority of the world population lives on paycheck to paycheck. For Instance, in the United States, the world’s biggest economy, 76 percent of residents survive on monthly pay.

Effective budgeting for the holidays is the only way to have a good time and still have enough funds left to take care of after-holiday bills and keep you going until the next paycheck.

Here is how to do it like a pro:

Set a Spending Limit

The first step to undertaking any project or activity is to determine the maximum amount of money it will require. Setting a spending limit calls for more than just randomly coming up with a figure. The limit ought to be a sensible amount arrived at after a careful examination of the activity at hand, your spending habits, future needs and future cash flow estimates. For a longer holiday like this one;

  • Calculate the number of days you will be actually out of work. Being on holiday for more days obviously calls for a bigger budget, and fewer days require less money
  • Study your past holiday budgets. For the typical consumer, chances are there won’t be sharp differences in the amount of money spent to fund the past two to three festive periods. If you have spent an average of $2,000, then you will likely spend around the same amount this season
  • Look beyond the holiday horizons. The New Year is quickly creeping in on us, and that means two things; work and bills. You must set aside enough money to clear your upcoming financial obligations.

Evaluate Your Funding Options

Even though many people rely on their paychecks to finance their holidays, this isn’t always the case. With essential consumer goods and services becoming pricier while paychecks stay the same, it’s difficult to save or even have a substantial disposable personal income after taxes and other expenses have been accounted for. Besides salaries, these are other common options for funding a holiday:

Personal Bank Loan

Banks are masters at crafting credit facilities that you don’t need. Many of them offer personal loans at lower rates for purposes such as honeymoon, holiday getaways and even ‘peace of mind.’ Imagine securing a loan just so that the money can sit at the bank and give you a peaceful mind! Anyway, as much as using credit to finance luxuries is not recommended, a growing number of people are relying on personal loans to get through holidays. Should you choose to go for it, be sure to:

  • Only borrow what you need
  • Shop around and find the banks offering the best rates or incentives. Some lenders offer gift cards when you take up their holiday loans. Such cards can reduce the amount of money you dedicate to purchasing gifts for friends and family
  • Look for lenders with flexible repayment terms.

Credit Cards

Credit cards are essentially personal loans, only that they come in a plastic card, and often with higher interest rates. You should apply the same criteria you would for a personal loan when looking for a credit card facility.


First, thumbs up if you have been saving for the holidays. One of the hallmarks a financially disciplined person is setting and achieving a savings target. You deserve to blow your entire savings, even though any personal financial advisor worth their salt would advise you to still “save your savings.” If you have accumulated savings that exceed your spending limit for the holiday, it’s prudent to stick to it and keep the rest.

Draft a Spending/Shopping List

Once the holiday cash is available, the next step is to create a list of what you would normally buy and do during the holidays. This may include clothing, food consumables, decorations and gifts, as well as activities such as skiing, skydiving and fine dining.

Crafting a holiday spending list should be an inclusive activity. Get the input of your kids, siblings and other people who you will spend their holiday with. After drawing up an extensive list that also takes into considering the length of the holiday (spread out the activities throughout the period instead of clustering them around Christmas or New Year’s Eve), calculate how much they will cost and compare it with your spending limit. If the estimated expenditure lies within the limit, bravo! The world needs more people like you. If the estimates run over your spending limit, don’t worry. Millions of other people around the world are in a similar predicament.

You have two options: cut back or increase the budget. The latter should be out of the question. Cutting back involves eliminating unnecessary expenses till the amount falls back to within the budget. Talk to all who contributed to the list and agree which items need to be struck off. If you are dealing with kids who may not understand the basics of budgeting, try to explain why it’s necessary to forego some items or activities.

Warning: Don’t draw a shopping list before setting a spending limit. If you do, you will be allowing yourself to create a budget that caters for your essentials, as well as the stuff you don’t really need.

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Essential Holiday Money Saving Tips

Plan Ahead of Time

Budgeting for the holiday before it arrives gives you a better idea of just how much money you will need and enables you to defeat the budget’s biggest enemy of all time – impulse buying. By planning ahead, you will be able to scout the shops and identify the ones offering the best deals. However, try not to window shop long before the holidays begin, as retail stores offer the best discounts close to or during the festive season. If you are flying out for a vocation, get your travel tickets and book hotels in time. You don’t want to waste a lot of time in long queues waiting for your turn to be served.

Go Online

The Internet is revolutionizing how we shop and make payments. Increasingly, it’s becoming more cost effective and convenient to shop online than at a brick and motor store. With events such Cyber Monday designed to promote online shopping, e-retailers are offering knock out deals that can save you lots of money. What’s more, your goods can be delivered to your doorstep free of charge or at a small cost. Online, you can easily compare rates among airlines, credit providers and hotels and restaurants, and make an informed decision before parting with your money.

Don’t Buy Gifts You Can Make

Sure, we are not all craftsmen who can craft kick ass items that are worthy gifting the people we love, but it doesn’t cost a dime to try. You could pull off something spectacular! Seriously though, sometimes you don’t have to go out of your way to purchase a pricey gift, while a DIY-gift would probably show the same level of affection or appreciation. Websites like Country Living and Buzzfeed provide comprehensive lists of homemade gift ideas your folks will love this holiday. Alternatively, you can approach experts who can make the gifts for you at a lower price than you would find at a shop.

Make Use of Digital Budget Planning Tools

A simple ‘budget planner’ search on Google or in your phone’s app store returns several results of digital tools that can help you stay on top of your expenses and manage your money properly. You can set alerts for anything that you need to purchase and you can link the app with your accounts, so you can organize your bills with ease. Some finance apps enable peer to peer payments and even give basic financial advice.

Fine Dining – At Home

Holidays come with a sweeping urge to shop, dine and hang out in all the fine places. While everyone would love to give in to these urges and indulge in the pleasures, sometimes, in fact often, money never allows it. But this doesn’t mean you can’t have a taste of the finer things, because you can still fine dine at home. With the right planning, ingredients and culinary skills, you can prepare and enjoy the same meals you would be served at a posh French restaurant! If you want to go out, then be sure to agree on how much you will spend to avoid ordering for additions that can fatten your bill. If folks are coming over to your home, entertain with your budget in mind.

So, fellow holidaymakers, this is how to budget for the holidays. Remember setting a budget is half the job. The other part is actually sticking to it. Now go kick it!

Download Our Holiday Budget Planner

Make use of our budget plan template to determine your expenses during holiday seasons.

Starting Business Expert advice and insight on starting, operating, and growing your business
As industry leaders for corporate solutions, StartingBusiness provides a broad range of high-end administrative and financial services to a global network of corporations and entrepreneurs from all around the world.
As industry leaders for corporate solutions, StartingBusiness provides a broad range of high-end administrative and financial services to a global network of corporations and entrepreneurs from all around the world.

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