5 Holiday Money Traps That Can Bust Your Budget
It’s easy to get caught up in the moment and forget your budget during the holiday season. You don’t want to reject any invitations or forget about getting anyone a gift. This is why it’s essential that we share holiday money traps that can bust your budget so you know what to look out for.
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What are financial decisions you make during the holidays that could have a negative impact on your savings efforts for the rest of the year?
Money Trap #1: Unplanned Gifts
“One holiday money trap that can bust your budget is host/hostess gifts,” shared Jessica Morgan, founder of Canadian Budget. “When heading to family or friends over the holidays, we often want to take a bottle of wine, some nice cheese, chocolates or another item to say thank you for hosting. This is usually on top of any gift that you may have budgeted for. These items are often never accounted for in the budget, and depending on the size of your social circle, they can really add up. Make sure you budget for these items this year.”
The unplanned gifts during the holiday season can quickly add up to hurt your budget. The best way to go about this is to set aside some flexibility in your spending since you’ll likely be attending more events in December. You’ll also want to factor in fuel costs and transportation since you may have to travel to get to these events.
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Money Trap #2: Not Creating a Holiday Budget
One of the biggest money traps is not creating a separate budget for the holidays. It’s important that you create a holiday budget so you have a limit on how much you’ll spend this year.
You have to be mindful that your holiday spending will be expenses added on top of the usual fixed costs you have to deal with. This means you still need to have the money for your mortgage or rent, cell phone and other living expenses. Creating a holiday budget where you set aside a specific amount for gifts and events won’t hurt your savings from earlier in the year.
Money Trap #3: Last-Minute Shopping
We’ve all been there at some point. Time gets away from us and it’s suddenly the day before Christmas. Unfortunately, last-minute shopping can be expensive and throw off your budget since you’ll have to settle in some cases.
By purchasing gifts earlier in the year, you can take advantage of comparison shopping and any sales you find. You also don’t want to deal with the stress of last-minute shopping. On top of the stress, you’ll likely overspend since you won’t have a plan, or the options will be limited.
Money Trap #4: Not Having a Discussion About Gift Giving
“The biggest tip we have for holiday shopping saving is to be the voice in their family that starts the conversation,” according to financial coaches Haley and Justin at Price of Avocado Toast. “Maybe it means we’re doing Secret Santa or only gifts $10 and under.”
A common money trap over the holidays is spending far too much on gifts when you don’t have to. You may want to consider reaching out to those with whom you exchange gifts to agree on some rules.
What else can you do to avoid this holiday money trap? Here’s what Haley and Justin suggested:
“It could also be a themed gift that everyone gets under a price limit, so we aren’t shoveling out money unnecessarily. Then, start comparing prices often. Shop around and see if different stores have cheaper options that still fill that desire to purchase a gift for someone.”
You also might want to consider homemade gifts, joint gifts for couples or offering your services. The goal is to have an open discussion about gift giving so you don’t feel the pressure to go over budget. You also might discover that your loved ones are on the same page and looking for creative options over spending a ton of money.
Money Trap #5: Forgetting About the Hidden Costs
Numerous hidden costs come with the holiday season. These hidden costs can bust your budget because you may be put in a situation where you have to spend the money even if you don’t have the funds set aside.
Here are some hidden holiday costs to think about:
Cards you plan on sending (postage costs and the actual card).
Random decorations that you purchase.
Entertainment costs when you have friends over.
Any holiday-specific clothing that you purchase.
Tips for service providers.
Tickets to concerts or children’s events.
These money traps can hurt your budget since these could end up being expenses that you can’t avoid. We urge you to consider hidden costs when making your holiday budget this year.
Closing Thoughts.
These are five common holiday money traps that can bust your budget if you don’t prepare in advance. You don’t want to find yourself with financial struggles because you didn’t plan for these expenses. The good news is that you can create a new gift-giving tradition this year with family and friends that isn’t based on spending significant amounts on items that will be forgotten about.
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This article originally appeared on GOBankingRates.com: 5 Holiday Money Traps That Can Bust Your Budget
