How to set a budget for holiday spending

PEMBROKE PINES, FLORIDA – AUGUST 21: Target store shopping carts are seen in the parking lot on August 21, 2019 in Pembroke Pines, Florida. Target Corps. stock price soared after the retailer topped earnings expectations as the company announced that second-quarter profits jumped 17% to $938 million, while revenues rose to $18.4 billion, up 3.6% increase from the year-ago quarter. (Photo by Joe Raedle/Getty Images)

Posted: Nov 11, 2020 / 01:58 PM PST

Updated: Nov 11, 2020 / 01:58 PM PST

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

ALBANY, N.Y. (NEXSTAR) — One of the most expensive times of the year is holiday season. Many people want to show their love to family and friends through gifts, but before they know it, the debt is piling up.

Before the holiday season arrives, consider putting together a budget for holiday gift giving. Especially in the current economic climate, a budget can help you keep track of your expenses, and keep you honest as you do your holiday gift shopping.

Evaluate your limits

It is important to set limits. You can do this by setting a per-person limit, or by setting an overall limit. Some people find it helpful to put together a list of everyone they plan to get gifts for, and then list “extra” gifts for people that they may have forgotten. Look at your list and your financial situation, and decide how much you can afford to spend on gifts.

Remember: You need to be brutally honest with yourself about how much you can afford to spend. You may not be able to buy a holiday travel package as a gift this year, especially if things are tight.

Consider your options

Think about the gifts that you plan to give. Check their prices and comparison shop. Think about your talents and consider making gifts. Remember to spend appropriately. Mom and dad should, as a general rule, have a more expensive gift than siblings. Do you really need to get gifts for the children of close family friends and relatives?

Another option is to speak with family ahead of time. Many large families limit gift giving budgets by doing a drawing for who you will buy a gift for. Then a dollar amount serves as the limit.

Track spending

Part of budgeting is tracking your spending. Make sure you are keeping track of the gifts you are buying, and how much is spent on each gift. If you are making gifts, track the cost of the materials you are using. Try and stay within your budget limitations. That is key to avoiding debt.

Planning ahead

Now is the time to plan for holiday gift giving.

Budgeting is all about planning for the future. And it is possible to include holiday gift giving in your year-round plans. You do not have to think about gifts only as the holidays approach. Set aside money throughout the year in a special savings account, ready to be used for the holidays. How much you save depends on your gift spending limit, as well as what you can afford after your own financial needs are met. You can also work gifts into your monthly budget, spreading the cost out over a year.

That way you will be less likely to go into debt when the time comes to buy gifts.