While the holiday season is still a few months away, it’s never too soon to create your gift budget. With this, you’ll have a clear idea of what you can afford to spend on every person on your list. But without it, you could find yourself overspending — and that’s sure to throw your finances into disarray as the year comes to an end.
Here are five questions to answer if you’re in the process of creating your holiday gift budget:
1. How much money do you have saved for the holiday season?
This is where it all starts. Once you know how much money you have, you can then decide how much money you need to save. This number could be big, small, or somewhere in between.
2. How much did you spend last year on gifts?
It’s good to know what you’ve spent on gifts in prior years so that you have a clear expectation of how much you need to save this time around. Keep in mind that your budget needs may vary, especially with inflation reaching new heights this year.
3. Do you envision yourself spending more or less this year?
This depends on several variables including your gift list, how much you’ve saved to date, and what you plan on buying each person. Be honest with yourself upfront so that you don’t run into any surprises down the road.
4. Do you have new people to add to your buying list?
This can have a serious impact on your budget. For instance, if you were buying for five people last year and ten people this year, you need to save more money. Carefully write out your list as soon in advance as possible.
5. Have you begun to think about the types of gifts you’ll purchase?
It’s one thing to have a list of people to shop for. It’s another thing entirely to make note of the gifts that you want to purchase. Make this easier on yourself by assigning a dollar value to each person on your list.
Tip: the longer you wait to make these decisions the greater chance there is that something you want to purchase will be sold out. Don’t be shy about starting your holiday shopping early.
As you answer these questions, you’ll come to realize that your holiday gift budget is taking shape. You can then determine how much you need to save between now and when you start shopping.
Have you thought about your holiday gift budget yet? What do you need to change? What can you keep the same?