Personal Finance Basics

Holiday budgeting and planning tips

September 19th, 2023 Sep 19, 2023 • Read time: 7 min


The calendar may tell us that there’s plenty of time before we think about holiday shopping. But it’s never too early to start planning your budget and saving your money so you can make the most out of your shopping this holiday season. Sun Loan has your back…keep reading to learn valuable holiday budgeting and planning tips.

Tips to help plan and budget during the holidays:

  • Start planning early.
  • Determine your budget based on plans or spending from prior years.
  • Save by building savings over time or by using a high-yield account.
  • Stick to your budget using spend-tracking apps, shopping mindfully, and using cash back on purchases.

1. Start planning early

Saving money and planning a budget are not the easiest things to do. But you can really benefit from doing this, so it’s a good idea to start building good money-management habits now. The sooner you start saving money and budgeting your finances, the better your chances of having a nice amount of money to spend on holiday shopping. Sticking to a budget takes patience and responsibility. But it can also result in more money saved and less debt in your future.

2. Determine your holiday budget

The first thing you need to do before you start your holiday shopping is figure out your budget. You’ll want to decide how much you want to spend–or can afford to spend–on holiday purchases, being careful not to overspend and run up unnecessary debt. Here are a few things to consider when figuring out your holiday budget: 

Segment budget into categories

Separate the different parts of your holiday shopping so you can figure out what to spend for each category. Examples include:

  • Gifts
  • Decor
  • Entertainment
  • Travel
  • Donations

Of course, you can create your own list of categories that apply to your budget and holiday traditions. For example, not everyone travels or spends money on entertainment during the holidays, so you could cut those categories from your list and add more money to your gift or decor budget.

Estimate expenses for each segment

Once you’ve created your list of expenses, estimate how much money you’ll need for each category. If you decide your overall budget is $600, estimate how much of that will go toward gifts, decor, donations, etc.–$450 on gifts, $100 on decor, and $50 for donations, for example. Once you settle on numbers you’re comfortable with for each category, try to stick to that amount and not go over.

Look at what was spent last year for each segment

If you kept track of holiday spending last year, use that as a starting point when trying to figure out this year’s holiday shopping budget. Maybe you’re in better financial shape than you were a year ago. If so, you may be able to increase your holiday shopping budget this year. If your money situation is the same or worse than last year, however, you may want to cut back your holiday spending to be safe. If you didn’t keep track of what you spent last year, start doing so this year. That way you’ll have a starting point when you begin your holiday shopping next year.

3.  Assess how much you already have saved and calculate how much to save

Take a look at your big-picture financial situation, such as how much money you have saved as well as what your budget looks like for your normal monthly expenses. From there, you can get a better idea of what you might be able to save and spend during the holiday season. As we mentioned in tip #1, it’s best to start budgeting and planning early…and this includes saving your money.

Say, for example, you have a child who wants a new baseball or softball bat for Christmas. Keeping in mind that some of these bats can cost up to $500, you can figure out how much you want or need to save so you can buy the right bat. That might mean taking $20 out of each paycheck for a few months and putting it into a savings account you open specifically for holiday shopping purposes. By the time you’re ready to start your holiday shopping, you should have the money you need–or at least a good portion of it–to buy your child their gifts.. 

How to save

  • Start early and build savings over time. As we mentioned, you could do this by taking small portions of each paycheck and stashing it in a savings account. You’d be surprised how much money you’ll have in that account before the end of the year.
  • Deposit money into a high-yield savings account. A high-yield savings account is a federally insured savings account that earns rates that are much better than the national average. According to NerdWallet, a high-yield savings account can earn around 4% APY; by comparison, the national savings average is 0.43% APY. This can add a little bit more to your savings each month.

4. Stick to your budget

Once you establish a budget, the next step is to stick to it. There are plenty of ways to make the most out of your budget and get the most bang for your buck so you can save some money along the way.

Most of these tips involve smart shopping rather than impulse buying where you purchase something as soon as you see it. To be a smart shopper requires some patience, time, and research. And it’s very rewarding knowing that you got yourself a great deal on a purchase. With that in mind, here are some tips on how you can stay on budget this holiday season.

How to stick to your holiday budget

  • Track spending to prevent overspending. Once you’ve decided on your holiday budget, one of the best ways to stick to it is by keeping track of all your purchases. If you shop in stores, make sure to organize all of your receipts. If you shop online, print up your purchase confirmation pages. Then add everything up to see how much you’ve spent in total. If you’ve reached your budget limit, it’s time to stop shopping!
  • Comparison shop. Never assume that the first price you see on an item is the lowest, because it probably isn’t. When you’ve decided which item to buy, visit the websites of several stores and retailers and compare prices. You can do this with toys, decor, video games, and even cars! Odds are, with enough research, you’ll be able to find a lower price on the item you want. And even if it’s only a couple of dollars…it’s still a couple of dollars you didn’t spend.
  • Make use of sales. As you’re well aware, there are plenty of sales happening around the holidays. Especially Black Friday and Cyber Monday. In fact, Black Friday isn’t even  a day anymore–it’s a full week! This is a great time to do your holiday shopping, in person or online. This is when you’ll find amazing deals on pretty much everything–TVs, video game consoles, computers, appliances, toys, and much more. And these usually aren’t regular sales. We’re talking 50” TVs for $200, $500 off a washing machine/dryer set, $3 Blu-ray movies, cheap iPads, and much more. Just make sure you pay attention to all the sales around the holidays because every store has one. And then compare sales prices, as we mentioned.
  • Use credit cards or apps with cashback to put toward future purchases. Most credit cards today offer incentives such as cashback on certain purchases, like gas, groceries, restaurants, and other categories. Some credit cards give you cash back on every purchase you make. And while 2% or 5% of your overall purchase may not seem like much, it certainly adds up over time, especially if you make a large purchase. Before you know it, you’ve got $20 of free money you can put toward your next credit card bill or purchase!

Similar to cashback credit cards, websites and apps like Rakuten and Capital One Shopping offer cash back when you purchase from certain retailers through their service. For example, if you’re looking to buy a new laptop, go to Rakuten or Capital One Shopping and search for electronics retailers–we’ll use Best Buy as an example. These cashback services will connect you to Best Buy’s website. And if you make the purchase from Best Buy through the cashback service, you’ll get a certain percentage back in cash. And even 1% or 2% of $600 makes a difference!

Start planning now!

The holiday season is a wonderful time of year, especially for giving. And by planning ahead and creating (and sticking to) a budget, you’ll be able to give the gifts you want to give, or buy the decorations you want for your home, or donate to a charity that is special to you. Even though the holidays are still a few months away, it’s not too early to start planning now! If you don’t have a separate savings account for your holiday purchases, set one up and start contributing a little bit each week. By the time December rolls around, you’ll probably be surprised by how much you’ve saved. Don’t forget to shop smart, compare prices, and be on the lookout for sales!

If you’re looking for more advice and information on budgeting and managing your personal finances, Sun Loan has you covered. Visit our Resource Center to read through our library of helpful articles and advice on how to make the most out of your budget. Happy shopping…and saving!

Author – Amy Sines

Amy Sines is Vice President of Operations Support at Brundage Management Company, the management holding company for Sun Loan. She brings two and a half decades of experience in the consumer loan indu... Read more »

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