Changing your money mindset means that you have to get into the habit of planning in advance. While you may already plan in advance for your household bills, consider doing the same for holiday spending to take it up a notch. Even if you are a last minute holiday shopper you can still prepare a specific amount to spend on gift giving this year.
New data from the National Retail Federation said in an October report that consumers were planning on spending an average of about $1,000 on gifts.
So think back to last year, who did you buy gifts for? How did you categorize the amount of gifts you got for each person? Who did you spend the most money on? And use that as a guide for this year.
Follow these steps below, or reach out to us for more guidance. This guide gives an example of a holiday budget done with a real client who had low income. Please let us know if you need help!
Step 1: Understand your monthly cash flow and then decide on which month of income you are going to use for gift spending. For example, if you only have $150 left every month after all bills are paid (this includes saving and debt payments). Then essentially you may only have $300 to spare on gift giving this season, considering that you would spend $150 in Nov and $150 in December.
Ex. Using those numbers, we are going to say that Joyce has $300 to spend on holiday gifting.
Step 2: Create a list of people you are going to give gifts to. Most people only factor in immediate family at first. But remember there are friends, cousins, nieces, nephews, in laws and even co workers! Maybe your child has signed up to give a friend in school a gift as well? Whatever is coming from your pocket, prepare for it!
Ex. Joyce will give gifts to her two children (2 each), her mother (1) and father (1), her spouse (1) and her niece (1) and co worker (1). She is also going to buy 2 items for herself.
Step 3: Recognize what those folks like, and find stores that are affordable. Add in wrapping and other costs.
For example, Joyce's co worker loves candles. Joyce will buy her co-worker a $20 candle. It costs $5 to wrap. The total gift is $25. In addition to that, Joyce agreed to buy wine for her work holiday party. Two bottles will cost her $20. All in all she will plan to spend $45 on work gifting. Using this same process she makes a list.
$45 on co worker (1) gift + work holiday party.
$100 on both children (4) gifts.
$30 on her mother (1) gift.
$25 on her father (1) gift.
$35 on her spouse (1) gift.
$15 on her niece (1) gift.
$45 on herself (2) gifts.
Total = $295
Step 4: Above is just a budget. Joyce will plan to spend $285, but she has a max budget of $300. And she has a max budget of what she will spend on each person. Lastly in her case, it would suit her best to find deals way below her budget plans and then pick the best day to purchase and wrap!
Note: If you have a higher positive cash flow, then you'll certainly have much more for gift giving but you still should set limits! Follow us on Instagram for more tips @brilliantgirlfinance.
Also if this doesn't work, consider saving a little every month in advance for Christmas. Add in a Holiday line on your budget, and then once November arrives set your limits!
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