How to Plan a Budget for the Holidays

11.21.2022 | Category: Article

With inflation still looming over the budgets of most American households, it’s not surprising that this holiday season might be coming with a little added stress over how much to spend. 

According to Deloitte's 2022 Holiday Retail Survey, Americans are likely to spend the same amount this holiday season, however, they might be making fewer purchases and handing out fewer gifts. 

Consumers are already taking note of retail giants like Amazon and Target, gearing up early for the shopping season of the year, with some reporting an early-start to shopping to get a head start on deals. This is one tactic that might pay off. But to really plan your budget diligently for the holidays, we follow these five tips. 

Budgeting Tips for the Holiday Season

1. Make a List. Check it Twice.

Take note of everyone, and everything, you think you might need to shop for this holiday season. Don’t stop at your family and friends. Be sure to include any holiday party gift exchanges, celebratory meals, and travel. The more detailed the better as you plan for your holiday spending. 

Once you have your list, give yourself an estimated cost and do your best to calculate based on current trends - not last year’s. If you’re unsure, don’t be afraid to ask how much something should cost and if the item typically comes down in price during the holidays. This will give you a holistic picture of how much you’re planning to spend and how much you think you can cut back. Adjust your list often so that there are no surprises at the end of the holiday season. 

2. Do Your Due-Diligence on Black Friday and Cyber Monday 

A common trap retailers that tout Black Friday and Cyber Monday deals lay out our for consumers is the promise of unprecedented markdowns when the truth is that oftentimes, discounts aren’t as deep as expected on the items that are likely to be on your list. 

Instead, retailers lure shoppers in with early-hours doorbusters and limited-quantity big-ticket items such as televisions and electronics. This is because retailers are banking on the hope that shoppers will spend more than what they came for - and they’re usually right! 

You can avoid this scenario by shopping during off-peak hours when the store is quiet so you can feel less tempted to buy more than what you intended to.

3. Cash in on Rewards Now

Many credit card companies offer cash rewards year-round, and if you’re a planner, you might find that now is a great time to cash in on these rewards. Some credit cards will offer discounts on gift cards or seasonal financing, helping you stretch your dollar farther. 

However, take careful take note of any terms and conditions. Credit card companies can often earn their money by charging interest on purchases or hidden fees when consumers are no longer within a promotional period. Avoid being charged these fees by saving the date on your calendar or signing up for auto-payment plans

4. Shop Second-Hand

Not only does shopping second-hand often save money, but it can also help save the environment. If an item on your gift-giving list can be purchased gently-used, now is a great time to get a great deal. 

Generally, the holidays are the time of year when shoppers can find deals on last year's model of items, slightly refurbished electronics and special occasion attire. Take advantage of shopping second-hand to save and stay within your budget.

5. Avoid Suspicious Websites or Unusual Retailers

If a deal seems too good, it just might be. This is especially true if you're shopping online. Be sure to research any consumer ratings for websites you've never purchased from before and look for signs that the site could be a scam before making a purchase. 

Signs of suspicious retailers might be reoccurring misspellings in the copy of the website, promises of deep discounts beyond what is typical for an item or a web address that redirects you to another site to make your purchase.

If you're willing to take the chance, consider using a credit card instead of a debit card. Many credit cards offer identity theft and fraud protection to their credit users. Fraudulent debit card purchases on the other hand, can be a costly mistake for consumers who often may not see their cash come back until an investigation proves fraudulent activity took place.

While the holiday season can seem like an expensive time of year for any consumer, these five steps can help you stay within budget and on track to reach your financial goals. 

If buying a home is one of your financial goals, be sure to keep your credit utilization low, pay your bills on time and avoid applying for new credit cards this holiday season. 

Once you feel your finances are in a good place for pre-approval, give Mutual of Omaha Mortgage a call. Our loan specialists can walk you through your financial options to set you up for success, no matter what your credit history might look like.