Holiday Budgeting… Are you ready?

Today’s post is brought to you by the popular personal finance and budgeting application Squirrel, who is here to help you with all of your holiday budgeting needs!

Let’s get serious about our holiday budgets.

The holiday season is a favourite for many. I know it is for me! Once fall hits, I start counting down to the month of December where I can openly sing Christmas carols without receiving second glances from strangers and strolls through Christmas markets with loved ones.

But, with Christmas, sometimes comes the “burden” of budgeting.

Last year, the average British family spent around £800 last holiday season, including holiday decorations, dinners, gifts, etc.

Around 35pc of Britons borrowed money or planned to borrow money for Christmas last year, and this percentage is expected to increase. The pressure to spend stems from the factor of pleasing the ones we love such as children and partners, or enticing shopping promotions.

But it is important to start thinking about the holidays now, so you won’t be in the bind come December of not knowing where this money will magically appear.

So what now? Set a Budget

The first step to holiday budgeting starts with honesty and transparency.

Create a list of what is needed this holiday season, the expected price of each item, and its weight of importance.

When deciding on this set budget, think of every dimension of the holidays, from gifting to holidays parties. I personally think of it as categories. For example, are you gifting presents to your partner and children? What about your parents and siblings? Both would be categorised under gifts. Do you want to host a holiday dinner? Entertainment. New ornaments? Decoration, and so forth.

Once you create a list of holiday expenses, review it to ensure everything on the list is essential. This is where the weight of importance comes to play. What are your non negotiables for the holidays? Use a ranking system, where 1 represents low importance and 5 represents high. For me, a non negotiable would be gifts for my parents, thus a 5. A Christmas tree, however, would be a 2.

Many financial planners suggest that you should not spend more than 1.5 pc of your annual salary on holiday expenses. This can be a useful starting point on where to start.

Be brutally honest with yourself –

It is important to be completely honest with yourself on how much you can realistically afford to spend on gifts for family and friends. Creating a budget dedicated to Christmas is the ideal start in knowing which gifts are within or without of your reach this year. It is important to note that this budget needs to be set on in cash, not on credit. The first steps to a creating a budget is to be realistic with your expenses— ask yourself can I truly afford to do this?

When budgeting, it is essential to think of alternatives to traditional practices. For gifts to family and friends, it does not always have to be a tangible gift. Holiday cards are great alternatives— or even truffles for your closed loved ones. You can even host a holiday potluck where you organise a secret santa exchange. Many times, the best memories during the holidays are not the gifts, but the time spent with our loved ones. Cliche, I know, but very much true.

Final Steps

Ok, so you have set a budget, and cut off the extra layer of non essentials. You are now left with a comprehensive list of what is needed and it is time to implement the holiday budget into your current monthly expenses. This may mean counting down on other commitments during the next two months in order to prepare or you may need a helping hand… I mean Christmas is drawing near.

You can first start budgeting for the month of December through financing planning applications such as Squirrel. Squirrel is an easy to use, personal finance management application that does all of this budgeting for you. You decide your commitments, i.e. rent, utilities, council tax, as well as your proposed savings, i.e. holiday expenses, and Squirrel withholds parts of your monthly salary and deposits the money at its specific due date.

Essentially, Squirrel allows anyone to regain control of their finances.

There are many budget friendly hacks to help subset the cost of the holidays whilst not compromising on the perks of the holiday season. Just because you are on a budget, doesn’t mean that it will negatively impact your holiday season!

Currently, Squirrel is offering a promotion for Disease Called Debt readers, where the first 3 months are free, then will proceed to a discounted rate of £2.99 per month. This promotion will be live until October 28th, 2016.

For further questions about Squirrel, visit squirrel.me or tweet @asksquirrel to share with us how you budget for the holidays.